Owner-Financed Real Estate Transactions

Not every real estate transaction fits the conventional mortgage model. Sellers looking to defer capital gains, buyers without access to traditional financing, and investors structuring creative deals all sometimes benefit from owner financing.

Owner-financed transactions require specific documentation and careful attention to the legal issues that arise when financing is provided outside the conventional mortgage system. At Ashton Title, we regularly close transactions structured as bonds for title and seller-carry arrangements.

Under a bond for title arrangement, the seller retains legal title while the buyer makes installment payments and takes possession of the property. When all payments are complete, the seller delivers a deed transferring title to the buyer.

This structure offers advantages for sellers, who retain significant remedies if the buyer defaults. For buyers, it provides a path to ownership when traditional financing isn't available. Both parties need to understand the risks, and the documentation must be carefully prepared.

An alternative approach transfers title to the buyer at closing, with the seller taking back a promissory note for the unpaid balance secured by a mortgage. The buyer gets immediate ownership and equity buildup; the seller gets a recorded security interest.

We prepare the necessary documentation: the promissory note specifying payment terms, interest rate, and default provisions; the mortgage securing the seller's interest; and the deed conveying title to the buyer.

Owner-financed transactions require careful attention to title issues, documentation requirements, and regulatory compliance. Both buyer and seller should have their interests protected through properly drafted agreements and appropriate title insurance.

We conduct thorough title examinations, prepare legally sound documentation, and ensure proper recording of all instruments.