Protection from the Financing Owners bad decisions/situations

[Lori Lloyd]

With the market shift on the horizon I expect we will begin to see more sellers show interest in Owner Financing as an option. I've found that nearly all attorneys in my area warn strongly against it (most will not even touch it!) due to the dangers to the Buyer if the Seller runs into financial distress and the property ends up on their list assets in a court proceeding. Wondering if having the Sellers place the property under an LLC before going to contract with Buyer would protect it? Buyer would then contract with the LLC. Has anyone here done this? Or what other methods exist to protect the Buyer?

[John Teachout]

Selling a property with "owner financing" as in the seller holding a mortgage is pretty straight forward and most attorney's or title companies have no issue with this. The contract for deed (land contract) was greatly affected by the Dodd Frank laws that resulted from the meltdown post 2008. States adopted their own versions of Dodd Frank and the feasibility of contract for deed varies by state. Our attorney here in Georgia doesn't recommend them. In some states, the buyer builds equity so it's not the simple system it used to be. They are certainly a risk for the buyer. However other fancy financial maneuvers such as wrap mortgages, etc. also contain risks for either the buyer or seller or both.