That’s what the OP has been saying from the beginning. That’s it’s (effectively) a zero percent interest loan with a straight declining principal balance. You see these in car deals sometimes, but rarely in real property transactions. I’d really like to get the attys take on what this thing she signed really is.
I’m betting it’s either some kind of rent to own concoction or a loan per above with a bullet payoff option the seller is exercising.
I know you didn’t think of it as borrowing money, and I believe that no one said ‘borrow’ or ‘loan’, but in the OP you said: "She suggested that perhaps the owner would be willing to hold the mortgage . . . " To bankers and realtors “holding the mortgage” means loaning someone the money to buy something your selling by declaring it to be sold. No actual money changed hands. But in the paperwork it’s like the owner loaned you $30,000 and then you turned around and gave it back to buy the house with.
After the papers are signed, you have the house and they have the paperwork for a mortgage loan with your signature on it. It’s also called “holding the note.” My parents bought a house that way, once. It’s not necessarily a bad idea or a bad deal, if it’s done right.
I think my parents’ note was a ten year one, though. And they agreed on the interest rate. A one year note, or one that can be called due any time, sounds harsh.
There’s no way to tell from here if that’s what they were doing or if they did it right. I hope that things work out for you and that the lawyer can settle things into something workable for you.
I wasnt implying a lack of interest or some kind of nod to payments>sale price. Just that like it or not she has borrowed money even though she implies she feels she has not. If she has not borrowed, she is renting or some hybrid RTO arrangement. If she is buying, she borrowed.
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Precisely, and therein lies the mystery. I have to admit the OP baffles me a bit. She posts like a literate, rational, and even, to a degree, a somewhat analytical person re the impetus for the deal, and yet she has almost no clue what she signed. If she can write she can read. I do real estate leases and contracts for a living and they are not all that cryptic re the description of the terms of sale or lease.
It’s puzzling.
Any news?
The OP said that she had a meeting with an attorney scheduled for yesterday. I’m curious if the meeting occurred and what the lawyer said (assuming that she is willing to share that information with us).
Interested in an update as well.
One more attempt at closure before this thread gets forgotten.
Well, you should know more than anyone whether she’s getting scammed ;).
I too am curious.
I’m guessing that the OP met with an attorney who told her pretty much exactly what she heard here and she isn’t looking forward to hearing a bunch of “told you so’s”.
Agreed. With the exception of the huge deposit it sounded exactly like a rent to own setup.
That’s my assumption as well.
Well I have put off posting any update. However, I did not hear pretty much what has been posted here.
The attorney I spoke with explained it this way, you have agreement a: lease and agreement c: sale, but they do not add up to agreement b: installment land contract, which is the term for the deal that I agreed to. It also does not equal agreement d: what is being claimed by the agent. He recommended that I contact the seller directly and try to come to a new agreement with her. I have sent her a letter but have not yet heard back.
He did say that it is not a lease to own agreement or whatever else people have assumed it is. In Pennsylvania, it is not legal to ask for or accept the amount that I put down as a downpayment as a security deposit on a rental. I would think the real estate agent knows this. I think what happened is the real estate agent was having a difficult time finding a buyer and worked up this cockamamie deal to get her commission and wash her hands of it. I think that the seller likes getting payment every month and has decided that perhaps being a landlord is a business she would like to be in.
We will see what happens, if we come to an agreement, thats great. If not, I will be getting back at a minimum my downpayment and whatever additional money I have paid (at least over the 450 per month). The 450 per month may not be recoverable, as I have lived here during this time. However, this house has recently been reappraised. My payment has been accepted for this long with no mention of these quarterly payments. In fact it was represented by the agent and seller, even in September, that I was buying this house to the boro. From my perspective, I am going to be out some equity in this deal. If I can not come to a deal with the seller I do intend to take her to the magistrate for the difference in the reappraised value, and what I believe I am out as a result of their not keeping their end of the deal. We will see what happens.
The agent, on the other hand is a whole nother issue. I am not sure if she presented a different picture to the seller than she did to me or not. However, the paperwork that she prepared is not any type of standard set up. I do believe that she, if not the buyer, took her money and ran. She declared herself to be a dual agent on the paperwork, so to my mind, she should be equally representing my interests, which she has not. I have a big problem with this. I am not sure who I should bring this up to, the real estate company, the Realtors association (which she does identify herself as on her business card), or someone else entirely.
I am not an unreasonable person, if she agrees to the installment land contract, I will be taking over all responsibility for taxes etc. That is fair enough. However, if she claims that all money I have paid so far is strictly rent, I do not think I can agree to that. We will see what happens.
Thanks for the update, OldnCrinkly. That sort of makes sense - no one really agreed to the same things somehow, and the dual agent does sound like she is to blame. We were warned off having a dual agent when we were buying and selling, and I guess this is why - real estate agents are supposed to be professional and work for their clients’ best interests, but if this one didn’t, there doesn’t seem to be anyone checking her work.
I would report her to both her real estate company and the Realtors association.
OK, you have an installment land contract, which is basically the same as a seller-held mortgage. This changes nothing about what we’ve said. You’re still borrowing the seller’s money (i.e. house) and therefore still can expect to pay interest and taxes. You can’t reasonably expect your entire payment to go toward principle. Even if somehow the seller conceded to pay the taxes for you, I can’t imagine they’d give you a no-interest loan as well.
Does your paperwork include an amortization schedule, by chance?
ETA: Read this at wiki.
Here’s one more thing you might want to consider: the mortgage interest tax deduction conveys to the buyer in an installment contract. If the seller had claimed the interest on her taxes and you did not, that might be enough evidence for a court that you two agreed that the seller would pay taxes on the mortgage (vice any agreement in the paperwork, of course).
Alternatively, you can go back and claim those taxes from last year and get about $500 back from the IRS, assuming you itemized.
I’m not a lawyer, so this isn’t advice, and it’s a flimsy idea, but it’s an idea nonetheless.
Regarding the agent presenting herself as a dual agent, that basically means she nabbed both commissions. How it works is usually there’s a buyer’s agent and a seller’s agent. A contract is often written up such that both agents are paid by the seller after the sale of the home is completed. Effectively it will say something like “seller agrees to pay a 6% commission to seller’s agent, to be split 50/50 with a buying agent” Now, should there be no buyer’s agent, seller’s agent will act as dual agent and collect the commission allocated towards both ends. Or, to put it another way, the entire commission was hers to begin with and since you had no one on your side, she doesn’t have to split it with anyone.
Now, no, she shouldn’t be trying to screw you over. But she’s also not your agent and she’s definitely not looking out for your best interests. It’s also not illegal or unethical.
Her changing set contractual language without a law license is a huge no-no, though. You may wish to contact your state’s board of Realtors to see what they can do to investigate the situation.
None of that solves you immediate dilemma, though, and I’d suggest doing what your attorney has recommended.
If the agent concocted this cobbled together mess of an agreement on her own she could be in serious trouble, and therefore the brokerage she works for could be exposed as well. If this is really as much a of screwed up mess as it sounds like your attorney needs to have a serious talk with the agent’s broker and the broker’s lawyer about what went down here.
You should not be paying a dime to unwind this deal (assuming you cannot come to terms with the seller) Talk to your attorney.
Well I agree that it should not cost me anything more to unwind the deal. Here’s the thing though, I would much prefer to just come to a reasonable agreement with the seller. I will make an honest and good faith attempt to do that. If it can’t happen, and we have to go to court, well that’s going to end up costing money too. I did find a very good attorney, but he’s not free! So, I am going with his suggestion to try to work it out.
By EnderW24
Just to clarify, if she identifies herself as a dual agent, how exactly, is she not (supposed to be) representing me as well?
Enderw24 is right, a dual agent handles both sides of the transaction.
States vary as to how agent allegiance is applied. You need to see the paperwork you signed with your agent. If it’s anything like my state, you will have a disclosure form, one of two kinds – defining you either as a customer or a client. If you are a client, she represents you. If you are a customer, she does not.
However, there are ethical considerations regardless, and the form you signed should outline those. Again, your attorney should be able to interpret what those mean.