Insurance and Taxes in Seller Financing deals

[Adam Schellhammer]

Hi BP Community,

I am currently analyzing my first seller financing deal on a duplex.  It's an estate sale and the owner is willing to carry the note for 2 years.  The monthly payments are what I need them to be to cash flow if I am understanding it right, but do the taxes and insurance costs get rolled into a seller financing like they would with a traditional mortgage.  Long story short, I recently purchased a duplex with a conventional mortgage and my monthly payments are $1,800.  The new duplex is almost a carbon copy and I can negotiate $1,800 a month to the owner so will taxes and insurance be included in that?  Thanks All!

Adam

[Bill Gulley]

No, generally seller financed notes do not escrow for taxes, insurance or other assessments, that is an escrow problem for the seller. You need to provide proof of paying such items upon request of the note holder. I also suggest you not DIY this and see your attorney and use a loan servicer. 

Consider that a shyster seller collecting payments could simply toss a payment in the trash and claim they never got it, then begin demanding all amounts due before a buyer sees the check wasn't cashed! CYA, see your attorney :)