The Vault - Questions and Answers

DATE:	02/26/03
SUBJECT/TOPIC:	CONTRACTS FOR DEEDS
	Q:	I have a client who did a land sale contract with a provision that if the party did not make their payment by the 20th of the month, that he could step in and reclaim the property. The party has been repeatedly late and gave him worthless checks numerous times. The purchasers are now wanting him to sell the house so they can get out of the contract. Should I make a new contract? The original contract had a clause that the owner could not sell the property. I know I have to watch for clogging the equity of redemption, but can the owner get by only refunding the down payment, or must he return all equity?
	A:	Tennessee courts are a bit inconsistent in how they treat contracts for deed. Some cases have enforced them strictly as written, but some have said they are like mortgages that have to be foreclosed. Either way, though, if your clients are willing to sell, I think you could do an amendment that says they can do so and that the other party will join in the deed. There would be a credit for the sums received against the remaining sums due under the contract. If the sale brings more than the remainder of the contract price, then the other party could get any excess after expenses are deducted.
		Prev	Home	Next

DATE:

02/26/03

SUBJECT/TOPIC:

CONTRACTS FOR DEEDS

I have a client who did a land sale contract with a provision that if the party did not make their payment by the 20th of the month, that he could step in and reclaim the property. The party has been repeatedly late and gave him worthless checks numerous times. The purchasers are now wanting him to sell the house so they can get out of the contract.

Should I make a new contract? The original contract had a clause that the owner could not sell the property. I know I have to watch for clogging the equity of redemption, but can the owner get by only refunding the down payment, or must he return all equity?

Tennessee courts are a bit inconsistent in how they treat contracts for deed. Some cases have enforced them strictly as written, but some have said they are like mortgages that have to be foreclosed. Either way, though, if your clients are willing to sell, I think you could do an amendment that says they can do so and that the other party will join in the deed. There would be a credit for the sums received against the remaining sums due under the contract. If the sale brings more than the remainder of the contract price, then the other party could get any excess after expenses are deducted.

Home