Are you thinking about buying or selling a home on contract? A real estate installment contract is seller financing: the owner remains in title and the buyer pays monthly payments. The buyer is also on title, making a contract sale different than a rental agreement. A contract may offer some advantages, such as speed and ease, but it also has several pitfalls.
A poorly written contract or one found online could be extremely detrimental in the event of a breach. Contracts for the sale of a home should be written by a licensed and experienced attorney to avoid any legal problems.
There are also regulations to be aware of. For example, a contract must be recorded. Additionally, the City of Des Moines has enacted a new ordinance regarding contract sales. As of August 2017, both the buyer and seller must demonstrate that the house passed a housing code inspection, or both parties to the transaction could face fines.
A certified housing inspector must inspect the property and disclose any issues that are not up to code. If there are any problems with the home, those deficiencies must be repaired prior to the contract sale.
The ordinance also states that city officials have the right to re-inspect the home after the contract is executed. You must prove that your home is safe and up to code from day one through the length of the contract. Both the buyer and seller could be assessed fines and fees up until the point at which the repairs are made.
When selling a home on contract, a seller must be ready for a potential breach of the contract. Getting out of the contract and getting the buyers out of the home can be a difficult task. Forfeiting a contract is time consuming, and is much harder than an eviction. Litigation can be expensive if even one small detail goes awry or in the event you have a poorly written contract.
If you are going to sell your home on contract, make sure you find buyers whom you trust.
To avoid any problems, contact an experienced attorney to discuss buying or selling a home on contract. Good legal advice and proper document drafting can minimize problems down the road.