Question on Contract for Deed deal in NJ

[Chris Masons]

Hi guys,

I am about to close on my first CFD deal here in NJ and had a question. Title is staying in my name until the note has been paid in full. I am financing him and continuing to pay my existing.....

MY question is, for now the homeowners insurance is in my name which he will be paying, is there any way I can get the Homeowners insurance out of my name and into his name? I am thinking not b/c legally he has no interest in this property. He has equitable interest via CFD contract and I continue to hold title (legal interest) This contract is not getting recorded at the county etc... So I am thinking insuranace will have to stay in my name for time being?

What do you think? Do you think there is great risk in doing this?

as always thx in advance!

Chris

[Chris Masons]

Thx for the insight Joel. I agree with what you are sying on CFD from a buyers standpoint.

Of course I am actually the seller in this transaction. I ended up getting almost 15% DP which makes me feel super comfortable should the need to foreclose arise. This is a 2 family in which my one current tennat is staying and will be paying me directly and new owner is just paying the differential. I have a clause in the contract stating should tenant for any reason not make payment said buyer is still responsible for full payment.

With the tenant paying down the Mtg for him he is VERY comfortable and not strapped. HE could make full payment if needed but it would be tight.

I am right around 5% on my loan for this property and gave him 6% fixed so I am making some abritrage here but the other good part of the deal is he is buying the property for same price I paid for it back in 2003. On the retail market I could not get close to that, I would be looking at ~275k with al lthe shorts and foreclosures dragging the market down over here.... Downfall is the loan is still on my credit making it more difficult to qualify for another investment. I guess you take the good with the bad right?

The deal is favorable to him b/c he cannot get conventional financing right now due to being in the middle of a short sale or maybe even a Deed in Lieu if he cannot find a buyer. He is a good responsible person who got caught up in a bad situation.

thx,
Chris