Frequently Asked Questions About Seller Financing, Part 4

Posted by Ric Thom on June 29th, 2010

Is it illegal to sell my property on a wrap around real estate contract if my mortgage is non-assumable?

No, it is not illegal and it is done quite often, but the buyer and seller need to know that it may trigger your due on sale clause in the mortgage. What really happens is that the mortgage company has the option to call it due if you sell the property. Incidents of called mortgages over the past 25 years have been extremely rare, but should be no indication of future performance. You should always consult a real estate attorney to fully understand the risks and responsibilities of the parties.

Do wrap around real estate contracts have special provisions that are different from non-wrapping contracts?

Yes, these additional provisions state exactly what the buyer’s and seller’s responsibilities are if the underlying mortgage should be called. The attorney preparing the documents will include these provisions for you in the real estate contract.

How do I get to see all the conditions of a real estate contract before accepting an offer?

You can see a sample of a real estate contract in the Forms Appendix of the free online book Real Estate Contracts in New Mexico. You can also ask your Real Estate Broker for a copy of a sample real estate contract.

How do I get the property back after the 30 day demand letter has expired?

The escrow company requires an affidavit of default from the person or attorney who sent the demand letter. If the escrow company deems it is a proper default it will release a special warranty deed to the seller from the buyer that puts the property back in the seller’s name. Once the deed is recorded it terminates the contract and if the buyer is still in or on the property they then become a tenant which means you can evict. Most leave before this.

Who pays the fees to the escrow company?

This is negotiable. The buyer can pay all, the seller can pay all, or the fees can be split any way they prefer. If it’s a wrap around real estate contract the buyer must pay 100% of all the fees.

How much are the escrow fees?

For Security Escrow’s latest fee schedule go to www.securityescrow.com/fees.

Will Security Escrow service real estate contracts that are on property other than in the Albuquerque area?

Yes, in fact over half of the real estate contracts we service are from outside the Albuquerque area.

What services does Security Escrow provide?

Security Escrow:

  • Stores the deeds in fireproof safes
  • Keeps an accurate accounting of principal and interest
  • Provides you with how much interest was paid or received for the year in January for tax return.
  • Supplies payment coupons to the buyer
  • Disburses all funds where directed by seller
  • Monitors accounts for demand letter deadlines
  • Pays annual property taxes and hazard insurance if provided for in the contract
  • Issues special warranty deed to seller in rare case of default
  • Sends the buyer the warranty deed when contract is paid in full.
  • And a whole lot more.