....Different Ways to Buy and Sell Real Estate in Arkansas... Advantages for Sellers and Buyers....
I want to sell my property, but the buyer can't get a loan to pay me in cash. What is the best way for me to sell my land?....I am thinking of buying a home. What terms should I ask for from the seller?
These types of questions are asked when it comes time to buy or sell land. In Arkansas three different methods for the sale of land are commonly used.
A land sale contract is the method most favorable to the seller. It is often used when the buyer cannot make a large down payment. The buyer agrees to pay for the property over a period of time. The seller agrees to deed the property to the buyer when the buyer pays the full amount. The property remains in the seller's name.
If the buyer fails to make payments, the contract ends, the money paid is simply treated as rent, and the seller often can get the property back without the cost of foreclosure. He can then sell the property to someone else.
An escrow contract involves the sale of the property through an escrow company. The escrow company obtains a warranty deed from the seller and a quitclaim deed from the buyer. The buyer makes his monthly payments through the escrow company. The property remains in the seller's name on the courthouse records, but a notice is recorded there showing that the buyer is buying the property through escrow.
The escrow company serves as the "referee" between the buyer and seller. It uses the escrow contract as its rule book. If the buyer makes all his payments in a timely manner, he is given the warranty deed and becomes the legal owner of the property. If the buyer fails to make the payments, the seller is given the quitclaim deed and is then free to sell the property to someone else.
The use of a deed and mortgage is the most common method of selling real estate. The buyer obtains a warranty deed at the time of the closing. The deed is then recorded, and he becomes the legal owner. At the same time, the buyer gives the seller a mortgage, which is also recorded. If the buyer fails to pay, the seller often has to foreclose on the property. Foreclosure is an expensive and time- consuming procedure. The Court often will give the buyer an opportunity to catch- up his payments.
This method offers the most protection to the buyer. He should ask for it if he makes a large down payment.
The above points are meant only as a general overview. With any of the methods, the buyer should have the seller's title checked before he makes any payments. However, many other questions often arise. For example, how will insurance and taxes be paid? What if the seller has a mortgage on the property? Will the buyer have the right to pay the loan off in advance? Each real estate sale is unique. An attorney skilled in such matters can help you think through these and other matters and include them in the agreement.
If our office can help you with real estate documents or in any other way, please call 479-968-4747 (Russellville area) or 888-295-4741 (Arkansas state-wide toll- free). We will be glad to assist in ensuring that your your legal rights are protected.
Copyright (c) 2011, Jim Carfagno, Jr., P.A. All rights reserved.