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How to protect deals from unscrupulous sellers or other buyers

 

Question: How do I protect myself after going under contract with a Seller? I have a situation where the Seller doesn't want to honor our deal. I brought his loan current with the bank, but he's dragging his feet on selling!!!

Answer: Good question. First of all, please know that we would NEVER recommend bringing a note current and making his back payments on his mortgage (depending on the amount), without first getting a Warranty Deed to the property.

Beyond that, the best way to protect yourself if youre going to put money out before the closing is to get a fully executed Security Deed on the property for that amount of money (assuming theres enough equity in the deal so you are truly protected).

Further, the best way to protect yourself against an unscrupulous Seller who may renege on the sale of the property is to file an AFFIDAVIT AND MEMORANDUM OF AGREEMENT FOR PURCHASE AND SALE. You can legally file (we strongly recommend that you pay for a Rush Recording at the courthouse) this Memorandum once you have a properly executed Sales Agreement with the Owner. Of course, file it in the Real Estate Records for the County where the property is located. The document tells the world that you have an equitable interest in the property. It acts as a cloud on the title so anyone conducting a title search for a closing would have to contact you prior to clearing the title. It may be weeks or months before you hear something, but you can then negotiate for some appropriate compensation from the Seller/Owner.

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