subject: The Use of Contract For Deed Form – Its Advantages and Disadvantages [print this page] The Use of Contract For Deed Form Its Advantages and Disadvantages
A contract for deed form is used for owner financing of real estate. Both the owner of the real estate and the buyer who is interested in buying that real estate, sign this contract in which the owner agrees to allow the buyer a deed after a fixed amount of money is paid to him. In most cases, the buyer has to pay the payment including the interest for the unpaid amount. After all the payment, which has been mentioned in the contract, has been paid by the buyer, the owner gives the buyer a deed to the property. During the term of the contract, the buyer has to pay the taxes and has to keep the property insured, or in other cases the buyer can simply reimburse the seller for same.
Advantages
The closing posts are minimum.
There are just a few or almost no other financing available for the buyers
Seller gains income through interest
The terms and conditions set for the interest are pleasant than the conventional terms in other contracts and deeds
Young buyers do not have to search for other financing sources
Disadvantages
Although an advantage for the seller but a disadvantage for the buyer, the process to cancel the contract is faster and shorter than to close the mortgage.
The value of the property decreases after the contract is cancelled.
The buyer does not only lose the house but even the invested money.
In case of mortgage on the property, the contract may be against the due-on-sale clause in the mortgage which the lender can seek to enforce.
