Skip Recording CFD's?

[Brittany P.]

Hi All,

I have a question that I'm sure will make me sound reckless to some of you experienced note investors. Here goes: I've just purchased my fifth contract-for-deed (CFD) and I'm now on a timeline where I save up and buy a new CFD every three months. Eventually I hope to cash flow where I'm making larger outright note purchases, but for now at my price point, smaller CFD's (around $15k UPB) are what I can afford.

Given that these are CFD's, I'm noticing that recording costs are a little heftier than just recording an assignment of mortgage. The transfer fees/taxes for the deed can get into the $400 - $500 range for each of these. So my question is: if I wanted to save on the recording costs, keep the deed for my records, proactively pay taxes as they're billed (would coordinate with the company I buy the CFD from), then work with the borrower to get the deed recorded under their name once they've paid off the contract--am I putting myself at risk? These contracts run from 3 - 5 years; is there a downside to skipping recording until deed is ready to go to the borrower, as long as I'm staying on top of taxes?

I look forward to hearing from the pros on this--thanks!

[Chris Seveney]

@Brittany P.

1. Read your loan sale agreement. When we sell a contract for deed the buyer is obligated to record the deed to get it out of our name.

2. You may not be able to insure the property.

3. If the borrower defaults recording takes time so you would lose that time

4. Any fines or violations you may not get notified of or if the seller to you somehow put leverage on it or the borrower