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Are you looking to purchase a home but do not qualify for a traditional mortgage? If so, then a contract for deed may be right for you. 

A contract for deed (also known as an installment purchase contract or installment sale agreement) is a real estate transaction in which the purchase of the property is financed by the seller rather than a third party such as a bank, credit union or other mortgage lender. It is often used when a buyer does not qualify for a conventional mortgage.

A scale house on some forms for a deed to conceptualize on the financial investment.

Instead of purchasing a home with a mortgage, the buyer agrees to directly pay the seller in monthly installments. The buyer is able to occupy the home after the closing of the sale, but the seller still retains legal title to the property until all payments have been made under the contract; actual ownership passes to the buyer only after the final payment is made. Contracts for deed have long been a financing option for property transactions between family members or friends. Some nonprofit housing organizations also use them to help low-income families find a path to homeownership.

However, a contract for deed can be a high-risk financing option  for the buyer — one that lacks many of the protections available under Minnesota law for homebuyers who have a conventional mortgage. Contracts for deed are also a favorite trick used by real estate scammers who will collect payments from a buyer while letting the property go into default with an unpaid mortgage. 

Consult an Edina Real Estate Attorney 

Someone considering a contract for deed as a financing option should really consult with a lawyer before signing. If you are considering a contract for deed purchase, let us help you. The Morris Law Group’s  Edina real estate attorneys offer Minnesotans 65 years of combined experience throughout the Twin Cities and surrounding areas. Our firm has a reputation for diligence, affordability, honesty – and a high success rate. Call us today for a free consultation at 952.832.2000 or visit morrislawgroupmn.com. 

Understanding Minnesota Contract for Deed 

A contract for deed generally appears simple and straightforward, but this financing option can pose a number of pitfalls for a homebuyer. Many buyers with contracts for deed never become full owners of the property and they lose all the payments they made toward ownership.

Before signing a contract for deed, prospective homebuyers should make sure they fully understand the extent of their obligations under the contract, all of the costs they will be responsible for and the risks they are incurring, including how quickly they can lose the home and all the payments they have made.

In a contract for deed, you must remember that you are not a tenant. Therefore, mortgage foreclosure laws don’t apply. You also need to know all of your obligations and rights before you sign a purchase agreement or contract for deed.  There are many legal aspects of a contract for deed that you may not understand. Don’t be nervous, call the attorneys at Morris Law Firm before you start the contract process. Our real estate attorneys are prepared for different circumstances and situations. For more information or to arrange a free consultation, call us today at 952.832.2000 or visit morrislawmn.com

Here are a few tips to keep in mind when looking at a contract for deed:

  • Get an independent appraisal and a professional inspection to tell you how much the property is worth so you do not overpay. An inspection will tell you about the property’s condition and what repairs are needed.
  • Understand the contract for deed and your financial responsibilities. This means you should review the monthly payment, property tax, insurance and maintenance/repair requirements facing. In addition, be sure to check the interest rate on the purchase and under what terms can the seller cancel the contract for deed? 
  • Get legal help. A contract for deed is a complex arrangement with many legal and financial risks.

The real estate attorneys at Edina’s Morris Law Group can help you understand the pros and cons of a contract for deed in your situation. Our team will research the property to help protect your rights and finances and make sure the seller really owns the property. You risk losing the home and everything you have paid if it has a mortgage and goes into foreclosure. Morris Law Group can help you ensure the contract is properly recorded with the county. This will also help prove your possession of the property and protect you from post-contract encumbrances placed on the property by the seller. 

Let us give you peace of mind. Schedule a free consultation today. 

About Morris Law Group. 

Integrity and trust is the foundation of our practice. Our passion for client success is matched only by our experience, our reputation for excellence, and our deep understanding of each and every client’s individual needs. 

At Morris Law Group, we don’t just counsel our clients. We invest in them. We’ve been serving the Edina and Twin Cities communities since 2002. Our attorneys provide personalized legal services to clients seeking help in real estate, business development, commercial litigation, and other matters. 

Our experienced Edina attorneys – Founder Richard L. Morris, Lillian Ballard, and Nicholas Henry – believe that relationships matter, whether a client is trying to navigate a purchase agreement, get a business off the ground, or dissolve a partnership. Our lawyers appear regularly in state and federal court, in administrative hearings, and in various alternative dispute resolution forums, including mediation and arbitration.

Morris Law Group is the best Minnesota law firm for all of your real estate and business legal needs. We advocate for our clients with professionalism, empathy, and with a results-driven approach. 

Let’s get started today. For more information or to book a free consultation, call 952.832.2000 or visit morrislawmn.com

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