Do contracts for deed stop foreclosure or delay the inevitable?

by | Jan 31, 2017 | Bankruptcy

The signs are everywhere. Constant pop-up ads interrupt web searches and surfing. The promotions trumpet an alternative to foreclosure. Homeowners can start over and stay in the home they once feared losing. Easy financing is available.

However, when it comes to the controversial contract for deed, nothing is simple. Or, perhaps it is too simple.

Toxic Transactions That Are Too Good To Be True

Contracts for deed are seller-financed, rent-to-own agreements that are attractive to homeowners facing a sheriff’s sale of their property. Investors scour public records to identify houses that have fallen into foreclosure. They swoop in quickly to make an offer the homeowner may not be able to refuse.

The old adage, “If it seems too good to be true, it probably is,” applies.

With limited time and options come hasty, poorly thought-out decisions. Desperation to stay in their homes makes property owners susceptible to enter what many call toxic transactions without knowing the risks involved.

One-Sided Agreements That Lack Safeguards And Legal Protections

Unlike traditional mortgages, buyers usually have limited ownership rights and control over their property in contracts for deed. In addition to monthly payments, they are responsible for homeowners insurance, property taxes, and repair and maintenance costs.

Should they fall behind or find themselves unable to make the all-too-common and often unaffordable “balloon payment,” the owners can cancel the contract and begin an expedited eviction process.

Few events in life create more uncertainty and stress than the looming loss of a family home. If foreclosure is part of larger financial problems, a bankruptcy attorney may be the best possible resource. Legal options do exist to stay in a family home without losing ownership.