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Minnesota Contract For Deed

In a Minnesota contract for deed, the purchase of property is financed by the seller rather than a bank or lender such as a commercial bank or credit union. The arrangement can benefit buyers and sellers by extending credit to homebuyers who would not otherwise qualify for a loan.

Facts and features

A contract for deed, also known as a “Owner financing,” “land contract,” or “installment land contract,”Seller financing” is a transaction in which the seller finances the sale of his or her own property. In a contract for deed sale in Minnesota, the buyer agrees to pay the purchase price of the property in monthly installments. The buyer immediately takes possession of the property, often paying 10 to 20% down of the sale price of the property, while the seller retains the legal title to the property until the contract is fulfilled.

The buyer has the right of occupancy Immediately. In Minnesota, the Contract for deed buyer has the right to claim a homestead property tax exemption. The buyer finances the purchase with assistance from the seller, who retains a security in the property.

The contract for deed is a much faster and less costly transaction to execute than a traditional, purchase-money mortgage. In a Minnesota contract for deed, there are no origination fees, formal applications, or high closing costs. Another important feature of a contract for deed is that seizure of the property in the event of a default is generally faster and less expensive than seizure in the case of a traditional mortgage. If the buyer defaults on payments in a typical contract for deed, the seller may cancel the contract, resume possession of the property, and keep previous installments paid by the buyer as liquidated damages. Under these circumstances, the seller can reclaim the property without a foreclosure sale or judicial action. Usually in Minnesota the contract can be cancelled after 60 days of non payment. Please seek legal advice on this.

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Because the buyer in a contract for deed does not have the same safeguards as those with a mortgagor in a purchase-money mortgage, the contract for deed may appear to be essentially a rent-to-own arrangement. However, in a typical contract for deed, the buyer becomes responsible for the obligations of a mortgagor in possession, such as maintaining the property and paying property taxes and casualty insurance. Unless prohibited by the contract, either party may sell his or her interest in the contract. The buyer may keep any equity above what the buyer owes to the seller and sell his or her interest in the property.

Image result for contract for deed form picture minnesota

Positives of a contract for deed

Homebuyers like contract for deed purchases for several reasons. This method may be especially appealing to homebuyers who do not qualify for a mortgage, such as people who work cash jobs and are therefore unable to prove their ability to make payments.

Buyers who have filed for Bankruptcy protection.

Second homes-investment properties vacation homes.

Lack of time at current employment. Most lenders will want 2 years at a job or if self employed.

Relocation.

Since the contract for deed process is significantly shorter than the mortgage-approval process, it may attract buyers who face time constraints or have limited options, such as people who are losing their homes to foreclosure. First-time homebuyers who lack experience in the market or individuals who are wary of traditional financial organizations may also choose a contract for deed because of the simplicity of the buying process.

Relocation from another state.

Minnesota law states that they require the buyers or sellers in all contracts for deed to record the sale in the office of the county recorder or registrar of titles within a specified time period.

The seller must set forth the terms of the contract in a purchase agreement. It is important that both parties fully understand the provisions of the contract, because once the purchase agreement has been signed, the options available to both the seller and buyer are limited.

    • The buyer should know whether he or she is responsible for property tax payments and insurance and whether the contract for deed includes a balloon payment. If it does include one, the buyer should be certain that he or she would be eligible for a mortgage to cover the payment when it comes due.

 

    • The buyer should also make sure that the seller is the true owner of the house by checking with the county recorder’s office to see who is listed as the registered owner. If the seller still has a mortgage encumbering the property or is responsible for paying the taxes or insurance,

 

  • The buyer should ask the seller for a Truth in Sale of Housing report to determine the condition of the house. This report is required in Minneapolis and St. Paul and some other cities. In cities where it is not required, the Buyer should find his or her own inspector to assess the condition of the home.

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The buyer should record the contract immediately with the county recorder’s office or the registrar of titles. Recording the contract will help prove the buyer’s possession of the property and protect him or her from post-contract encumbrances placed on the property by the seller. We always recommend using a title company or law office for the closing they will record the deed for the buyer and seller.

To purchase real estate in Minnesota or Wisconsin the buyers and sellers should use BoardWalk Premier Realty. 651-334-8312

No Mortgage Registration Tax (MRT) is due on the recording of a contract for deed because a contract for deed is exempted under the MRT law. View the law, Minnesota Statutes, Chapter 287.04 subdivision(d).

Deed following Contract for Deed

Deed Tax is due on the conveyance of legal ownership of real property with a deed following the satisfactory completion of the terms of a contract for deed. The deed that conveys legal ownership of the property from the grantor to the grantee is taxable. The basis of the Deed Tax is the total consideration for the conveyance. In most cases, the total consideration is equal to the principal amount of the purchase price agreed upon at the time of the sale.

Note: The basis of the Deed Tax does not include the interest charged and paid as part of the installment payments under the contract agreement.

Completion of Contract for Deed

Example of a Minnesota Contract for deed execution.

(A) Steve sells real property to Joe for $ 200,000 on a contract for deed.

Terms: $ 20,000 down payment

$ 180,000 (6% interest amortized over 30 years $ 1079.19 plus taxes and insurance monthly for 60 months)

When the contract is “paid in full” and Paul provides a warranty deed to Joe. Deed Tax is due on the $ 200,000 purchase price.

Cancellation of contract for deed

No Deed Tax is due on the cancellation of a contract for deed. It is included as an exception to the tax under M.S. 287.22, Clause (1). The result of the cancellation is that the grantor retains legal ownership of the property.

Assignment of grantor’s (vendor’s) interest with warranty or quit claim deed

Under a contract for deed, the grantor retains the legal title to the real property until the purchase price is paid in full and the other terms of the contract are completed.

Before a contract is paid off, the grantor (vendor) may choose to assign its contract rights to a third party.

Assignment of a grantor’s right to receive the payments is exempt from Deed Tax because no real property is conveyed. However, if the grantor issues a deed to the property along with the assignment, the conveyance document is subject to tax. Tax is based on the price paid for the assignment less the current contract for deed principal balance.

Under a contract for deed, the grantee (vendee) generally has the legal right to possess and use the property during the course of the contract and to receive legal title to the property when the terms of the contract are completed.

The assignment of a grantee’s interest in a contract for deed is exempt from the deed tax if the only thing conveyed is the right to make the payments and occupy the property during the term of the contract. However, if the grantee issues a deed to the property along with the assignment, the conveyance document is subject to the Deed Tax. Tax is based on the price paid for the assignment less the current contract for deed principal balance.

What types of properties can I buy on a contract for deed?

Single family,Town homes,Condo,Lake properties,Cabins,Investment,Waterfront,Commercial,Land

Farms,Acreage,New Construction

Virtually every type of property available can be purchased on a contract for deed. Feel free to browse our inventory of contract for deed properties. We have 100s of properties to view daily. Contact us about our contract for deed financing.

 

What are some of my other options?

If you have little money down you may try to see if the seller is willing to offer Rent to own.

Rent to own : Means the Minnesota home owner has promised to sell the property to the tenant for a certain price within a certain time frame. Often a portion of the rent paid will go toward either the purchase price or buyer’s closing costs associated with the purchase in the form of a rent credit. Tenant maybe responsible for taxes and insurance.

Lease options:

Another Option you may want to try.

A lease option is also called a Lease With the Option to Purchase is a type of contract used in both residential and commercial real estate. In a leaseoption, a property owner and tenant agree that, at the end of a specified rental period for a given property, the renter has the option of purchasing the property. The tenant usually pays all taxes and utilities.

Owner financing:

With a traditional mortgage, you borrow money from a bank to pay for the property. Then, you make payments back to the bank to pay off the loan. With owner financing, you make arrangements to pay the owner in installments, typically of principal and interest, until you’ve paid off the purchase price of the property. It’s very similar to a contract for deed. It depends on how you draft the contract/agreement.

Seller financing:

Seller financing is just what it sounds like: instead of the buyer getting a loan from the bank, the person selling the property lends the buyer the money for the purchase. The buyer and seller execute a promissory note providing an interest rate, repayment schedule, payment amount, length of the contract and consequences of default.

 

What is the disadvantages of a contract for deed?

Default and Foreclosure Risks

A buyer risks losing the property and all money paid toward the property if he falls behind on the monthly payments. One disadvantage of a contract for deed to the seller is that clearing the title may take time and money if the buyer defaults on the contract. The seller’s in Minnesota can foreclose on the property in 60 days if the buyer defaults, and the buyer has no recourse against the seller.”Seek legal advice on this”. The buyer does have the right to sell the property before the property  goes back to the seller. The buyer will want a quick closing.

Advantage to buyer

If you can’t qualify for a mortgage because of a past bankruptcy, your income,Self Employed,Low credit scores. or employment history, a contract for deed could be a good alternative. If the seller is willing to sell on a cd then you are good to go, that’s all you need to go ahead. You may have more freedom negotiating a down payment, but in most cases the seller will want 10%  to 20% down of the sale price of the property to do a cd, and your closing costs are a lot lower than a mortgage, No origination fees and other expenses involved in taking out a mortgage. Another advantage is that if you default on your mortgage, a lender could demand you pay off the entire loan, even if you make up the payments. A seller using a contract of deed doesn’t have that right, unless you agree to include that as a clause in the contract.

Disadvantages to seller:

The biggest disadvantage of selling a property this way is that the property won’t be off paid off for 3-7  years, which may not suit your investment strategy. You’ll also be waiting until the contract is finished to receive all of your money, instead of the immediate payment you’d get from a mortgage sale.

Advantage to sellers:

1. No appraisal

2. No financing contingency to worry about – you approve the Buyer’s credit.

3. Quicker settlement – no waiting weeks for lender approval.

4. Cash flow

5. No more late night calls from renters . The buyers take over repairs and up keep.

Advantages to seller:

If you’re the seller, a contract for deed offers you a way to cash flow your property and usually get a higher return on your money than a bank. This opens up a larger pool of potential purchasers for your property. The process is usually quicker than a mortgage sale, too.Most closings can closes as quick as a week with BoardWalk Premier Realty. If the buyer goes into default, you can terminate the contract promptly, without taking the time for all the legal procedures required for a mortgage holder to foreclose on a home.

Disadvantage for seller:

1. If the Seller has a mortgage The Seller remains liable on the loan until it is paid. To protect the Seller, the  Contract for Deed provides that upon default, the Buyer’s interest terminates and all sums previously paid are rent. The Seller can evict the Buyer and take the property back.

2. The loan continues on the Seller’s credit report. This could present issues for the Seller to qualify on a new home. Most new lenders will count at least 75% of the Buyer’s payment as income to the Seller for qualifying purposes.  If you are planning on buying a house soon, check with your new lender for details.

3. This risk of non-payment is similar to the risk assumed by any landlord. The contract for deed has an advantage over a lease because the Buyer is paying the full cost of the mortgage, homeowner fees and maintenance. In addition, the Buyer has paid closing costs and has an ownership interest. Unlike a lease, there are no maintenance, management and move-out hassles.

Disadvantages to buyer:

1. Three to Seven years is a minimum recommended term.  This allows time for a refinance. It gives time for the property to appreciate. The Buyer can earn more money or resolve credit issues to qualify.

2. If the Buyer defaults, the Contract for Deed terminates the Buyer’s interest and treats all payments as rent.  The defaulting Buyer could stand to lose his investment.

If you would like to know more about contract for deed call us we can help you buy or sell a property on a contract for deed in Minnesota or a land contract in Wisconsin.

 

Where do I record my Contract for deed after I purchase my Home in Minnesota?

Hennepin County  is a county in  Minnesota. As of the 2010 census the population was 1,152,425. It is the most populous county in Minnesota and the 35th-most populous county in the United States; more than one in five Minnesotans live in Hennepin County. Its county seat is Minneapolis, the state’s most populous city. The county is named in honor of the 17th-century explorer Father Louis Hennepin.

Hennepin County is included in the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area.

The center of population of Minnesota is in Hennepin County, in the city of Minneapolis.

Hennepin County Recorders office for the following cities.

Map of Minnesota highlighting Hennepin County

Hennepin County is the largest county in Minnesota. Minneapolis Contract for deed is part of the twin cities metro area.

  • Bloomington, Minnesota
  • Brooklyn Center,Minnesota
    • Champlin, Minnesota
    • Chanhassen, 
    • Corcoran, Minnesota
    • Crystal, Minnesota
    • Dayton,Minnesota
    • Deephaven, Minnesota
    • Eden Prairie, Minnesota
    • Edina, Minnesota
    • Excelsior,Minnesota
    • Golden Valley,Minnesota
    • Greenfield,Minnesota
    • Greenwood,Minnesota
    • Hanover, Minnesota
    • Hopkins, Minnesota
    • Independence, 
    • Long Lake, Minnesota
    • Loretto, Minnesota
    • Maple Grove,Minnesota
    • Maple Plain, Minnesota
    • Medicine Lake, Minnesota
    • Medina, Minnesota
    • Minneapolis largest city in Minnesota.
    • Minnetonka Beach, Minnesota
    • Minnetonka, Minnesota
    • Minnetrista, Minnesota
    • Mound, Minnesota
    • New Hope,Minnesota
    • Orono, Minnesota
    • Osseo, Minnesota
    • Plymouth, Minnesota
    • Richfield, Minnesota
    • Robbinsdale,Minnesota
    • Rockford, Minnesota
    • Rogers, Minnesota
    • St. Anthony, Minnesota
    • St. Bonifacius,Minnesota
    • St. Louis Park, Minnesota
    • Shorewood,Minnesota
    • Spring Park, Minnesota
    • Tonka Bay, Minnesota
    • Wayzata,Minnesota
    • Woodland,Minnesota

 

 

 

Ramsey County is a county located in Minnesota. As of the 2010 census, the population was 508,640, making it the second-most populous county in Minnesota. Its county seat is St. Paul, which is also Minnesota’s state capital. The county was founded in 1849 and is named for Alexander Ramsey (W), the first governor of the Minnesota Territory.

Ramsey County is included in the Minneapolis–Saint Paul-Bloomington, MN-WI Metropolitan Statistical Area. It is the smallest and most densely populated county in Minnesota, as well as one of the most densely populated counties in the United States

Ramsey County Recorders office

Map of Minnesota highlighting Ramsey County

Saint Paul Contract For Deed the 2nd largest city in Minnesota and is part of the twin cities metro area.

A

  • Arden Hills, Minnesota

B

  • Blaine, Minnesota

F

  • Falcon Heights, Minnesota

G

  • Gem Lake, Minnesota

L

  • Lauderdale, Minnesota
  • Little Canada, Minnesota

M

  • Maplewood, Minnesota
  • Mounds View, Minnesota

N

  • New Brighton, Minnesota
  • North Oaks, Minnesota
  • North St. Paul, Minnesota

R

  • Roseville, Minnesota

S

  • St. Anthony, Minnesota
  • Saint Paul, Minnesota
  • Shoreview, Minnesota
  • Spring Lake Park, Minnesota

V

  • Vadnais Heights, Minnesota

W

  • White Bear Lake, Minnesota

Washington County is a county located in Minnesota. As of the 2010 census, the population was 238,136, making it the fifth-most populous county in Minnesota. Its county seat is Stillwater. The largest city in the county is Woodbury, which had a population of 61,961 at the 2010 census. The county was established in 1849.

Washington County is included in the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area.

Washington County Recorders office

Map of Minnesota highlighting Washington County

A

  • Afton, Minnesota

B

  • Bayport, Minnesota
  • Birchwood Village, Minnesota

C

  • Cottage Grove, Minnesota

D

  • Dellwood, Minnesota

F

  • Forest Lake, Minnesota

G

  • Grant, Minnesota

H

  • Hastings, Minnesota
  • Hugo, Minnesota

L

  • Lake Elmo, Minnesota
  • Lake St. Croix Beach, Minnesota
  • Lakeland Shores, Minnesota
  • Lakeland, Minnesota
  • Landfall, Minnesota

M

  • Mahtomedi, Minnesota
  • Marine on St. Croix, Minnesota

N

  • Newport, Minnesota

O

  • Oak Park Heights, Minnesota
  • Oakdale, Minnesota

P

  • Pine Springs, Minnesota

S

  • St. Marys Point, Minnesota
  • St. Paul Park, Minnesota
  • Scandia, Minnesota
  • Stillwater, Minnesota

W

  • White Bear Lake, Minnesota
  • Willernie, Minnesota
  • Woodbury, Minnesota

Anoka County  is the fourth-most-populous county in Minnesota. As of the 2010 census, the population was 339,534. The county seat and namesake of the county is the City of Anoka, MN

The largest city in the county is the City of Blaine, the thirteenth-largest city in Minnesota and the eighth-largest Twin Cities suburb.

Anoka County comprises the north portion of the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area, the largest metropolitan area in the state and the sixteenth-largest in the United States with about 3.55 million residents.

Anoka County Recorders office

Map of Minnesota highlighting Anoka County

A

  • Andover, Minnesota
  • Anoka, Minnesota

B

  • Bethel, Minnesota
  • Blaine, Minnesota

C

  • Centerville, Minnesota
  • Circle Pines, Minnesota
  • Columbia Heights, Minnesota
  • Columbus, Minnesota
  • Coon Rapids, Minnesota

E

  • East Bethel, Minnesota

F

  • Fridley, Minnesota

H

  • Ham Lake, Minnesota
  • Hilltop, Minnesota

L

  • Lexington, Minnesota
  • Lino Lakes, Minnesota

N

  • Nowthen, Minnesota

O

  • Oak Grove, Minnesota

R

  • Ramsey, Minnesota

S

  • St. Francis, Minnesota
  • Spring Lake Park, Minnesota

Dakota County is the third-most populous county in  Minnesota. As of the 2010 census, the population was 398,552. The county seat is Hastings.Dakota County is named after the Dakota Sioux tribal bands who settled in the area.

Dakota County is included in the Minneapolis–St. Paul–Bloomington, MN–WI Metropolitan Statistical Area, the sixteenth largest metropolitan area in the United States with about 3.3 million residents. The county is bordered by the Minnesota and Mississippi Rivers on the north, and the state of Wisconsin on the east.

Dakota County Recorders Office 
Map of Minnesota highlighting Dakota County

A

  • Apple Valley, Minnesota

B

  • Burnsville, Minnesota

C

  • Coates, Minnesota

E

  • Eagan, Minnesota

F

  • Farmington, Minnesota

H

  • Hampton, Minnesota

I

  • Inver Grove Heights, Minnesota

L

  • Lakeville, Minnesota
  • Lilydale, Minnesota

M

  • Mendota Heights, Minnesota
  • Mendota, Minnesota
  • Miesville, Minnesota

N

  • New Trier, Minnesota
  • Northfield, Minnesota

R

  • Randolph, Minnesota
  • Rosemount, Minnesota

S

  • South St. Paul, Minnesota
  • Sunfish Lake, Minnesota

V

  • Vermillion, Minnesota

W

  • West St. Paul, Minnesota

Chisago County  is a county located in Minnesota. As of the 2010 census, the population was 53,887. Its county seat is Center City. The county’s name comes from Chisago Lake.

Chisago County is included in the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area as well as the East Central Minnesota region.

Chicago County Recorders office

Map of Minnesota highlighting Chisago County

  • Chisago City, Minnesota
  • Harris, Minnesota
  • Lindström, Minnesota
  • North Branch, Minnesota
  • Rush City, Minnesota
  • Shafer, Minnesota
  • Stacy, Minnesota
  • Taylors Falls, Minnesota
  • Wyoming, Minnesota

Townships[edit]

  • Amador Township
  • Chisago Lake Township
  • Fish Lake Township
  • Franconia Township
  • Lent Township
  • Nessel Township
  • Rushseba Township
  • Shafer Township
  • Sunrise Township
  • Wyoming Township

Pine County is a county located in  Minnesota. As of the 2010 census, the population was 29,750.Its county seat is Pine City. The county was formed in 1856 and organized in 1872.

A portion of the Mille Lacs Indian Reservation is in this East Central Minnesota county.

 

Pine County Recorders office

Map of Minnesota highlighting Pine County

A

  • Askov, Minnesota

B

  • Brook Park, Minnesota
  • Bruno, Minnesota

D

  • Denham, Minnesota

F

  • Finlayson, Minnesota

H

  • Henriette, Minnesota
  • Hinckley, Minnesota

K

  • Kerrick, Minnesota

P

  • Pine City, Minnesota

R

  • Rock Creek, Minnesota
  • Rutledge, Minnesota

S

  • Sandstone, Minnesota
  • Sturgeon Lake, Minnesota

W

  • Willow River, Minnesota

Scott County is a county in Minnesota. As of the 2010 census, the population was 129,928.Its county seat is Shakopee. The county was organized in 1853 and named in honor of General Winfield Scott.

Scott County is part of the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area. It is a member of the Metropolitan Council, and shares many of the council’s concerns about responsible growth management, advocating for progressive development concepts such as clustering, open-space design, and the preservation of open space and rural/agricultural land.

Map of Minnesota highlighting Scott County

Scott County Recorders office

B

  • Belle Plaine, Minnesota

E

  • Elko New Market, Minnesota

J

  • Jordan, Minnesota

N

  • New Prague, Minnesota

P

  • Prior Lake, Minnesota

S

  • Savage, Minnesota
  • Shakopee, Minnesota

Wright County is a county in Minnesota. As of the 2010 census, the population was 124,700. Its county seat is Buffalo.  The county was founded in 1855.

Wright County is part of the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area.

Map of Minnesota highlighting Wright County

Wright County Recorders Office

  • Albertville, Minnesota
  • Annandale, Minnesota

B

  • Buffalo, Minnesota

C

  • Clearwater, Minnesota
  • Cokato, Minnesota

D

  • Dayton, Minnesota
  • Delano, Minnesota

H

  • Hanover, Minnesota
  • Howard Lake, Minnesota

M

  • Maple Lake, Minnesota
  • Monticello, Minnesota
  • Montrose, Minnesota

O

  • Otsego, Minnesota

R

  • Rockford, Minnesota

S

  • St. Michael, Minnesota
  • South Haven, Minnesota

W

  • Waverly, Minnesota

 

For More resources on Contract for deeds .

mnhomescontractfordeed.com

minnesotahomescontractfordeed.com

mnlakeplace.com

These are the Leaders in Minnesota Owner financing.

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