I’m considering purchasing a park on seller finance, but concerned that if something was to happen to the sellers at any time in the future, whilst their finance is still in place, that their estate could call in the loan. This may happen when interest rates are much higher, or when borrowing via banks is restricted.
So, how common / is it legal to add a clause to the contract that negates the sellers estate from calling in the loan, upon the death of the owner’s?
Also, on this topic - are there any other possible issues that go along with using seller finance?
All seller carry should be structured so that the seller can never “call” the loan. If they die, the loan proceeds go to their heirs, but they do not have the ability to demand the loan be paid in full. The only way that they loan should be due in full is if 1) you don’t make the payments 2) you fail to cure the default after proper notification or 3) the note comes due in a balloon. That’s it.
Seller financing is the greatest financing on earth. That said, you need to have a lawyer write or review your note. Unlike banks, sellers often are willing to create a note on a piece of paper with a crayon. That does not work for the buyer. You need a real note – just like a bank note.
Have you bought a mobile home in a park that had an underlying bank note attached?
My example: Bank Note Bal: $15,000 Monthly payments: $465 PITI Seller wants a little moving money and I will take over the existing loan payments until my Buyer cashes me out.