Real Estate Agent · Gainesville, FL · Member since 2016 · 115 posts · 100 votes
What happens if a buyer defaults on a seller financing deal after they have already made improvements to the land?
Here's the story… I am a realtor in Gainesville FL and I have the seller and a potential buyer posed the question of seller financing and my seller is not opposed to it. One of his questions was what happens if the buyer defaults on the loan and he has already started building his house or put some sort of improvements on the land. Would it be as simple as the seller will then just take the land back or will there have to be legal remedies in order to get everything in order?
I spoke to a lender and she said that most mortgage companies will not loan out money if they dont actually own the land and in that case the mortgage company will pay off whatever still due. But what happens if they decide to put on a home or a mobile home or a pole barn that they paid cash for?
Real Estate Agent · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
9y
If it is attached to the property is becomes part of the parcel and would remain during a foreclosure The mobile home if not converted to real property would belong to the owner and he may remove it much like a car
Investor · Pflugerville, TX · Member since 2014 · 152 posts · 93 votes
9y
Make sure the owner finance loan paperwork has the seller as the primary lien position and that no other lien may be put on the property (land) without their written permission. This way they can ensure that no one else can foreclose on any additions to the land without getting the seller paid first. Like @Account Closed said, if it is attached to the land than the seller gets it back during foreclosure. A mobile home with another note would not be considered part of the land but a barn or other structure with a permanent foundation would.
The only downside for the buyer is that not many places will do construction or other loans if there is a superior lien on the land, but usually they can find a mobile home to put on there.