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On the tenant thing, your son should be able to approve the lease and also verify that the tenants have not locked in a low rate for multiple years, which sometimes sellers do for friends and relatives. Your son has to be able to get rid of the tenants if they are really awful people. And the sales contract should say that the seller can not enter into any new rental agreements or change lease terms once the offer papers are accepted.
Is the seller a relative? He is trying awfully hard to get your son into that property. If I were selling, there is no way I would offer a deal like that to a stranger. It's just odd, so be careful and verify everything.
On the tenant thing, your son should be able to approve the lease and also verify that the tenants have not locked in a low rate for multiple years, which sometimes sellers do for friends and relatives. Your son has to be able to get rid of the tenants if they are really awful people. And the sales contract should say that the seller can not enter into any new rental agreements or change lease terms once the offer papers are accepted.
Is the seller a relative? He is trying awfully hard to get your son into that property. If I were selling, there is no way I would offer a deal like that to a stranger. It's just odd, so be careful and verify everything.
Good point. No, it's not a relative. The seller doesn't have a formal lease wth the tenants. They have been there for about 8 years.
For the buyer, it might be OK. What is the interest rate? Because that makes a difference. Is your son absolutely certain he can make the payments so he won't lose the property?
Everything should be in writing and have a real estate specialist lawyer take a look at the contract before he signs.
If there is a septic or well, those should be tested, verify zoning, verify with the county building department that it is buildable. Check on any new road or development plans for the near future that might affect the property
Note: interest rate for bare land is always higher than a regular house mortgage.
Yes to all of these. The interest rate would be 6%.
Sure! It's because none of it makes sense for the buyer. It's not up to the seller to dictate what the buyer does with the property after he buys it. Nor does the financial part of it (misstating the purchase price and the terms in the contract) make any legal sense either. In fact, it smacks of conspiracy to defraud the government of revenue. IRS doesn't take kindly to this sort of thing.
If I were the buyer (your son), here's what I would want: I'd want a deed to the property and would be willing to sign a promissory note secured by a mortgage or deed of trust which clearly and accurately spelled out the repayment terms to include the total principal amount of the note, the interest rate, and the monthly payment. It should also state that there is no penalty for prepayment of principal.
The mobile home and everything on the property would then belong to your son once the papers are signed and the seller would have zero input after that as long as your son made the payments as called for in the note.
And I don't advise using a land contract if I'm the buyer. They're great for the seller, but not so great for the buyer.
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Makes sense. Thanks for spelling it out.
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