Need advice on a land contract deal with a twist

[Ryan Church]

So a family member of mine is looking to sell a trailer and the land that's with it.

There was previously a house on the land, but 2 year ago a tree fell on that house and with the insurance money he bought a brand new extended singe wide trailer for $57,000(paid in full). I always thought of trailers as trashy, but this one is pretty nice. It was also barely lived in, as he used it as a "camp" or getaway on the weekends.

He paid off the trailer but didn't pay off the land (previously the mortgage for the house) and still owes $9,000 on the land plus $3,000 in back taxes.

We came to an agreement for a land contract at $8,000 down and $500 a month for 5 years and then I own it all. The issue is he is going to use the down payment to pay off the taxes and continue to pay his monthly payment with my 500 a month until the land is paid off. I was worried about protecting myself and him not actually paying the land off. So we came to this agreement:

He will sign the title of trailer to me for the $8,000 and do a separate contract for the land at 500 a month for 5 years. This makes me feel better as I am getting a trailer worth a lot more if he fails to not pay the land side of the deal.

Is this a good way to structure this deal? Any suggestions and comments would be great. Thank you

[Bill Gulley]

Dealing with family is a little different, certainly don't want to appear like you don't trust them, but approach it in a business like manner and use the fact that anyone can get hit by a bus and that other issues can arise.

You have many options as to how funds are applied to what, but the taxes must be paid.

The fact that you are taking title to a MH may not mean much if that is being taxed as real estate, if it is, it goes with title to the land over personal property. And, if it is, the MH is also collateral to that lender!

You need to do a subject to transaction, he gives you a Special Warranty Deed excepting out the mortgage. You should pay the mortgage and give him the difference. You don't need to notify the mortgage lender. Chances are, the loan is a portfolio loan out of a bank and they are servicing the loan. Being related gives a bit more leeway in making the payments, you can also go at the transaction as being part of the family estate planning measures which can keep you clear of the due on sale clause (might search that on BP).

Good luck :)