HomeGuru help!!!

[mailman16]

What is the name of your state? IN

I just received a copy of my "contract for conditional sale of real estate" in which I am the buyer and ran across this section that troubles me. Is this common real estate contract language or should I be worried?

Section 6. Seller's right to mortgage real estate.

6.01. Mortgage loans.
Without buyer's consent and without obligation to buyer except as set forth in this section 6, seller shall have the right to retain, obtain, renew, extend or renegotiate a loan or loans secured by mortgage(s) on the real estate (all instruments evidencing a loan(s) and a mortgage(s) securing it is hereinafter called "loan"), provided that the terms of each loan do not conflict with the provisions of section 6 or any other provision of this contract. Seller shall pay each loan when due.

6.02. Provisions of loan. Each loan made by seller shall:
(a) be in such principal amount the aggregate principal balance of all loans shall not exceed the unpaid purchase price for the real estate:
(b) have total periodic payments which do not exceed the periodic payments by buyer under this contract, and shall provide for the regular amortization rate of the principal of seller's loan which exceeds the amortization rate of the unpaid purchase price of this contract:
(c) provide for prepayment in full at seller's option, whether with or without premium, at any time.

6.03. Notice of Loan. Contemporaneously with the exection of a loan, seller shall give buyer written notice and inform buyer in reasonable detail of the principal amount of the loan, the name and address of the mortgage, the installments payable under the the loan, and such other terms as buyer may reasonably request.

6.04. Releases. Upon payment in full by buyer of all amounts payable under this contract, seller shall pay in full all amounts payable under loan(s) at the time outstanding and obtain and record, or cause to be recorded, a valid release of loan(s) so paid.

I guess my question is this: if the seller takes out a loan against this property and then defaults, will it affect this contract? In other words, can the lending institution take this property regardless of our arrangement with the seller? And last but not least HG, would you be interested in seeing the entire contract?

[HomeGuru]

[quote]Originally posted by mailman16
[b]What is the name of your state? IN

I just received a copy of my "contract for conditional sale of real estate" in which I am the buyer and ran across this section that troubles me. Is this common real estate contract language or should I be worried?

Section 6. Seller's right to mortgage real estate.

6.01. Mortgage loans.
Without buyer's consent and without obligation to buyer except as set forth in this section 6, seller shall have the right to retain, obtain, renew, extend or renegotiate a loan or loans secured by mortgage(s) on the real estate (all instruments evidencing a loan(s) and a mortgage(s) securing it is hereinafter called "loan"), provided that the terms of each loan do not conflict with the provisions of section 6 or any other provision of this contract. Seller shall pay each loan when due.

6.02. Provisions of loan. Each loan made by seller shall:
(a) be in such principal amount the aggregate principal balance of all loans shall not exceed the unpaid purchase price for the real estate:
(b) have total periodic payments which do not exceed the periodic payments by buyer under this contract, and shall provide for the regular amortization rate of the principal of seller's loan which exceeds the amortization rate of the unpaid purchase price of this contract:
(c) provide for prepayment in full at seller's option, whether with or without premium, at any time.

6.03. Notice of Loan. Contemporaneously with the exection of a loan, seller shall give buyer written notice and inform buyer in reasonable detail of the principal amount of the loan, the name and address of the mortgage, the installments payable under the the loan, and such other terms as buyer may reasonably request.

6.04. Releases. Upon payment in full by buyer of all amounts payable under this contract, seller shall pay in full all amounts payable under loan(s) at the time outstanding and obtain and record, or cause to be recorded, a valid release of loan(s) so paid.

I guess my question is this: if the seller takes out a loan against this property and then defaults, will it affect this contract?

**A: of course it would affect the contract and put your property into foreclosure. I would not agree to let the Seller take out any mortgage on the property once the property is sold to you.
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In other words, can the lending institution take this property regardless of our arrangement with the seller?

**A: you're darn right. That is why you have no protection.
****************

And last but not least HG, would you be interested in seeing the entire contract?

**A: no thanks, because I know it was one sided and favored the Seller and you did not have an attorney review it.

[mailman16]

So it would be a good idea to ask him to remove this section before we signed the contract?
And also, is this an agreement commonly used in purchase contracts?
Thanks again HG!!

[HomeGuru]

[quote]Originally posted by mailman16
[b]So it would be a good idea to ask him to remove this section before we signed the contract?

**A: no, it would be a good idea to have an attorney review the ENTIRE contract.
**********

And also, is this an agreement commonly used in purchase contracts?
Thanks again HG!!

**A: no, not when I am the attorney representing the Buyer.

[mailman16]

Thanks for the advice HG, I just faxed the entire contract to a local real estate attorney and got an appointment set for next week.

[HomeGuru]

Good job mailman and good luck to you.