A seller financing contract, also known as a purchase money mortgage or owner financing agreement, is a legal document outlining the terms and conditions of a real estate transaction where the seller provides financing to the buyer instead of or in addition to traditional bank financing. This type of agreement allows the buyer to make payments directly to the seller over time, typically with interest, until the property is paid off in full. Here's an overview of what a seller financing contract may include:
1. **Parties Involved:**
- The contract should clearly identify the seller (the property owner) and the buyer (the individual or entity purchasing seller financing contract the property).
2. **Property Description:**
- A detailed description of the property being sold, including its address, legal description, and any relevant identifying details.
3. **Purchase Price:**
- The total purchase price of the property, as well as the amount of any down payment made by the buyer at the time of closing.
4. **Terms of Financing:**
- The terms of the seller financing arrangement, including the interest rate, the term of the loan (i.e., the length of time over which payments will be made), and the amount of each payment.
5. **Payment Schedule:**
- A payment schedule outlining the frequency and amount of payments to be made by the buyer to the seller, typically on a monthly basis.
6. **Late Fees and Penalties:**
- Any late fees or penalties that may be assessed if the buyer fails to make payments on time.
7. **Security Instrument:**
- The contract should specify the type of security instrument that will be used to secure the seller's interest in the property. This could include a mortgage, deed of trust, or land contract.
8. **Default and Remedies:**
- Provisions detailing what constitutes a default under the contract and the remedies available to the how to sell a house by owner in washington state seller in the event of default, such as foreclosure or repossession of the property.
9. **Prepayment Options:**
- Whether the buyer has the option to prepay the loan in full before the end of the term and any penalties or fees associated with prepayment.
10. **Property Taxes and Insurance:**
- Responsibilities for payment of property taxes, homeowners' association dues (if applicable), and insurance premiums should be clearly outlined.
11. **Closing and Transfer of Title:**
- The contract should specify the closing date and the process for transferring title from the seller to the buyer, including any necessary documentation or legal steps.
12. **Governing Law:**
- The contract should specify the governing law under which it will be interpreted and enforced.
13. **Signatures:**
- Finally, the contract should be signed and dated by both the seller and the buyer, as well as any witnesses or notaries required by law.
It's crucial for both the seller and the buyer to fully understand the terms of the seller financing contract before signing, and it's advisable to consult with a real estate attorney to ensure the agreement is legally enforceable and adequately protects the interests of both parties.