Terms for selling a lot with owner-financing

[Jacqueline Gardiner]

Hello BP members!

I have a 2 ac. lot for sale in CA ($110K value). I stated in the advertisement that I would consider owner-financing because the lot is in an area where lot sales have been very slow for years. I have the property paid off, but I'm tired of paying the taxes and insurance on it and having the equity tied up.

There is an interested party who is asking for specifics on what I would accept. Below are the terms that I am thinking (all to be verified with a CA real estate attorney if we get to that step):

• 5%-6% interest rate
• 10 year loan with either interest only or payments amortized over 30 years
• $10K down payment (enough to cover attorney's fees and closing costs now + money for foreclosure if it becomes necessary)
• Due on sale clause
• No subjugation to any other loan - so it would have to be paid off when a construction loan is taken out.
• No home construction to begin within two years of the sale (to avoid some of the Dodd-Frank provisions). A mobile home could be put on the property sooner, but not if it requires a lien on the property or requires construction that could result in a lien on the property.
• Buyer to provide proof of identification (driver's license or passport with current address)
  
• Buyer to provide proof of income (two years tax returns)
  
• Employment to be verified (I assume this would be with a call to the employer)
• Credit score of at least 650
• Late charges -5% of the monthly payment if over 10 days late.
  

I would appreciate input regarding the above terms and anything else important that I might be forgetting. Thanks so much!