Are their 3rd Party Options for Structuring Seller Financing?

[Shari Posey]

I'm a real estate agent who has a seller offering financing on a single unit. We also have a buyer who wants to buy with seller financing. This is an area that neither I nor the seller have experience with. Because of the SAFE Act I'm nervous about proceeding too far into the deal. Is there a 3rd party type of company that can assist with this? Or is the best option a real estate attorney? I talked to a mortgage broker and he said he wouldn't touch it with a 10-ft. pole because of the new regulations.

[Brian Burke]

As a California RE licensee, you can facilitate the transaction. The CAR has a seller finance addendum in Zipforms (form code SFA) that covers the required issues. The title company can draw the note and deed of trust, and may be able to answer questions related to escrowing the impounds.

Typically, HOA dues are junior to a recorded deed of trust so the seller shouldn't have to worry about non-payment of those (review the HOA bylaws to verify). Property taxes are senior, so they DO need to worry about those. The seller could just hire a tax service to notify them of missed tax payments, so the complexities of impounding can be avoided (title company should be able to help with this).

If they really want to impound taxes, one option is to hire a loan servicing company to service the loan and manage the impounds. There are serving companies that specialize in servicing private money loans.

If you are unclear of all of the nuances, ask your broker for assistance. If your broker can't help, you might consider having a real estate attorney review the seller finance addendum (or use the CAR legal helpline). If you are representing both sides, you should especially consider having an expert review the addendum.

All of the above is just a real-world example, not legal advice, so proceed at your own risk and carry good E&O insurance that doesn't exclude seller financed transactions.