Owner offering Owner/Seller Financing, but is elderly what happens if he passes away?

[karriwhel]

What is the name of your state (only U.S. law)? Texas
Out of curosity what happens if we decide to purchase a home through owner/seller financing with a wrap around mortgage & the owner passes away? Of course we would hire an attorney/title company/title insurance, etc. to make this legal/legit & protect ourselves, but we are just considering our options right now. The owner is 90yrs old & just wants to get rid of the house for what he owes on the mortgage in his name. His son has expressed interest in the home (we currently rent the home & have been for several yrs). Our concern would be that if he passes the son would become an issue, but more importantly what would become of the status of the home? Would the title insurance take care of this type of concern so that we would not have to worry at all? Right now we are just in the collecting info stage. We are not at the point where we could purchase on a convententional loan because we are still saving for the down payment so we thought this owner financing may be worth exploring further, but not if this guy is going to kick the bucket & leave us with a fight on our hands with his family. Not sure if it matters, but this property has always been investment property for the owner & no one in his family really has sentimental attachments. Thanks for any info!

 

[tranquility]

The note would pass to the heirs. Unless there was an acceleration clause (unlikely) related to the death, your duties would remain the same--except you'd be paying someone else.

 

[HomeGuru]

What is the name of your state (only U.S. law)? Texas
Out of curosity what happens if we decide to purchase a home through owner/seller financing with a wrap around mortgage & the owner passes away? Of course we would hire an attorney/title company/title insurance, etc. to make this legal/legit & protect ourselves, but we are just considering our options right now. The owner is 90yrs old & just wants to get rid of the house for what he owes on the mortgage in his name. His son has expressed interest in the home (we currently rent the home & have been for several yrs). Our concern would be that if he passes the son would become an issue, but more importantly what would become of the status of the home? Would the title insurance take care of this type of concern so that we would not have to worry at all? Right now we are just in the collecting info stage. We are not at the point where we could purchase on a convententional loan because we are still saving for the down payment so we thought this owner financing may be worth exploring further, but not if this guy is going to kick the bucket & leave us with a fight on our hands with his family. Not sure if it matters, but this property has always been investment property for the owner & no one in his family really has sentimental attachments. Thanks for any info!

**A: that is way you need an attorney to review the Seller's mortgage docs draft your docs. Is there a due on sale or transfer clause in the exisiting mortgage?

 

[FlyingRon]

The death can not trigger an acceleration, but the entering into the contract for deed or whatever he's doing to make this wrap CERTAINLY CAN. This isn't owner financing in the least. It's let's put on over on the bank and is highly HIGHLY risky for you. If he stops paying his mortgage while alive, the bank will foreclose and you will be screwed.