Verbal Acceptance of Offer: Owner-Financing Questions

[William Donaldson]

I recently made a verbal offer to the seller of a SFH that was accepted. This is my third purchase, but the first time I will be utilizing seller-financing to acquire a property. To be perfectly honest, I expected the seller to prefer the all-cash offer, but I am thrilled she is accepting the following offer:

Purchase price:  $40,000

Down payment:  $2,000

Seller Financing:  $38,000 first-lien mortgage fully amortizing over 15 years at a 5.0% fixed interest rate, resulting in monthly payments of $300.50

The questions I have are as follows:

-The purchase contract I am working on notes in the "Method of Payment" that there will be $2k down and a $38k mortgage to be held by seller.  I am working on the addendum that goes into more detail.  Exactly how much detail do I need in the addendum regarding the mortgage?  I will use a mortgage drawn up by my lawyer, but I do not know how much detail about the mortgage needs to be contained in the purchase contract/addendum.  

-Is it customary for the seller/mortgagee to send an annual statement that includes the amortization schedule, amount of interest/principal paid during the year, remaining principal, etc. to the mortgagor in an owner-financing arrangement?  If so, would it be acceptable for the statement to be managed by a third-party (lawyer/accountant) and signed by both parties annually?  I would like to reduce the burden on the seller while at the same time covering my bases.

-How is the Satisfaction of Mortgage document typically handled in this situation?  Since it is a standard form, I assume when we arrive at that point we can both sign the document in the presence of a notary.  Or would it be more wise to do so with the assistance and guidance of a RE lawyer?

Thanks!

[Dave Toelkes]

Most of the answers to your questions are state-specific. SC is an attorney state, and I know that a deed must be prepared by an attorney before it will be recorded.  The attorney handling your settlement should be able to answer all your questions, and even prepare any necessary documents for you.