Paying off owner-financed mortgage

[lismith]

What is the name of your state?What is the name of your state? AL

Our home is owner financed. When we bought the house we went with the owners to an attorney to have mortgage papers drawn up, but since then we've always made payments directly to them so no mortgage company or attorney is involved. We have one payment remaining on the mortgage. What will happen after the last payment is made? What will we need to do and what will they need to do to transfer the deed, etc.? Thanks.

 

[HomeGuru]

What is the name of your state?What is the name of your state? AL

Our home is owner financed. When we bought the house we went with the owners to an attorney to have mortgage papers drawn up, but since then we've always made payments directly to them so no mortgage company or attorney is involved. We have one payment remaining on the mortgage. What will happen after the last payment is made? What will we need to do and what will they need to do to transfer the deed, etc.? Thanks.

**A: your error. You should have had an attorney draft the contract and required a title report, a collection account and recording of your contract.

 

[MortgageGuru]

What is the name of your state?What is the name of your state? AL

Our home is owner financed. When we bought the house we went with the owners to an attorney to have mortgage papers drawn up, but since then we've always made payments directly to them so no mortgage company or attorney is involved. We have one payment remaining on the mortgage. What will happen after the last payment is made? What will we need to do and what will they need to do to transfer the deed, etc.? Thanks.

Have the lien holder sign a release in front of a notary and then go record it.

 

[nextwife]

AS this was a PRIVATE sale:

Did you get an owners title policy when you bought initially?

Did you have a properly executed deed recorded? Was the mortgage recorded?

If you didn't do the above, it is essential that you first get an owners title policy insuring your interest and verifying that there are no liens, judgements, mortgages against the prior owners interests AND that you know who has ownership interests and that the correct parties, etc. are the ones signing any deeds or releases. And that the proper legal descriptions (per the title commitment) are used.

If you didn't use an attorney when you bought, better to use one now, than not, so you can make certain you end up with the legal interest you paid for while these parties still are legally tied to you. If you don't get this right NOW, you may have a dog of a time trying to go back and correct it later.

 

[HomeGuru]

AS this was a PRIVATE sale:

Did you get an owners title policy when you bought initially?

Did you have a properly executed deed recorded? Was the mortgage recorded?

If you didn't do the above, it is essential that you first get an owners title policy insuring your interest and verifying that there are no liens, judgements, mortgages against the prior owners interests AND that you know who has ownership interests and that the correct parties, etc. are the ones signing any deeds or releases. And that the proper legal descriptions (per the title commitment) are used.

If you didn't use an attorney when you bought, better to use one now, than not, so you can make certain you end up with the legal interest you paid for while these parties still are legally tied to you. If you don't get this right NOW, you may have a dog of a time trying to go back and correct it later.

**A: picky, picky picky........hahahaha............

 

[nextwife]

Well I sure as heck wasn't going to tell them to make their last payment and let the sellers walk away forever without them even knowing whether they are getting good title! Yikes.

 

[Ciarraine]

I will assume that you did this the right way when your bought the home. You should dig up your papers and see if this is how it happened to be sure:

The attorney probably did get a title report, you may or may not have bought title insurance at that time, the attorney probably recorded a deed from the sellers to you and a Deed of Trust or Mortgage that got recorded, too. That would have been the usual way to do an owner-financed purchase. If you did something different, come back and tell the forum what it was.

So assuming that's what happened then what should happen next is:

• Make your final payment.
• Get a Certificate of Satisfaction drawn up by a title company or real estate attorney. One page form, says you're paid in full and the mortgage or deed of trust that is recorded in the land records of the county is cancelled. They can probably print it with a few clicks right from their settlement software.
• Have the lender (Mortagagee) sign it and have them notarize the document
• File the form with the Recorder of Deeds/Clerk of Court for your county and pay the fee for doing that. Usually it's among the cheapest of their fees.
• Pop some champagne and celebrate.

Total cost to do those steps is probably around 100 bucks, champagne not included. Technically it's a cost the lender should bear.

 

[lismith]

I want to thank everyone here for the great advice! We did already have the deed and just didn't realize it. We had an attorney look at our deed, who told us all was in order and the certificate of satisfaction was the only thing left to do. The previous owners signed a certificate of satisfaction, had it notarized, and filed at the courthouse. And we now officially own our home, it feels great!!! Thanks again!

 

[HomeGuru]

I want to thank everyone here for the great advice! We did already have the deed and just didn't realize it. We had an attorney look at our deed, who told us all was in order and the certificate of satisfaction was the only thing left to do. The previous owners signed a certificate of satisfaction, had it notarized, and filed at the courthouse. And we now officially own our home, it feels great!!! Thanks again!

**A: what type of title insurance do you have, if any?

 

[Ciarraine]

I want to thank everyone here for the great advice! We did already have the deed and just didn't realize it. We had an attorney look at our deed, who told us all was in order and the certificate of satisfaction was the only thing left to do. The previous owners signed a certificate of satisfaction, had it notarized, and filed at the courthouse. And we now officially own our home, it feels great!!! Thanks again!

Congratulations! I hope someday I'm in your shoes!

 

[nextwife]

**A: what type of title insurance do you have, if any?

Yup. I always worry when I know that someone may have purchased RE without title insurance. Because 5, 10 or 15 years from now, when they go to sell or refinance, some title issue that could still be open pops up and then the title company is made out to be obstructiing the process because they want the owner to clean up some problem that should have been cleaned up at the time they purchased, but nobody realized it at the time because they DIDN"T get title insurance!!!!