2nd Position - Owner Carry

pet455 · Joined: 07 Sep 2008 Posts: 1 1.32 Dollars($)

I have a buyer for my home. He is putting down 10%, borrowing 70% from the bank and he wants me to carry 20% for 1 year.

Can I go after his personal assets like his car, bank account, other homes, etc., if he defaults on my loan?

Should I have a lawyer type something up or just use a basic loan document?

Lastly, if he stops paying me but pays the bank, is the only option I have is to BUY OUT the bank loan and then foreclose on him?

How risky is what I am doing?

helping_user

Hi pet,

Welcome to forums.

If a buyer defaults in owner financing, then the seller can foreclose on the property. However, in your situation, there is a mortgage on the property and the owner financing will be subordinate to the home loan.

Does the lender know that there's a owner financing deal between the buyer and you? or is it what you call the "silent second"?

In general when a property has only owner financing on it, the seller can come after the buyer's personal assets if the latter isn't able to pay off the entire amount. But this is possible only if it is stated on the contract. And of course, the seller should take an attorney's help if he forecloses property.

Thanks.

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