Owner Carry - 2nd position

**Lbear** · 09-07-2008, 01:02 AM

I am having a hard time selling my home (surprise!). I have received an offer and the buyer wants me to carry 20% for 1 year. He is putting down 10% and the bank is financing 70%.

Being that I am going 2nd on the loan. I am concerned about the risks. If he pays the bank but stops paying me, how can I foreclose on him?

Can I go after his other assets (car, other home, bank account)?
What should I do to reduce my risk and cover all bases?

**Realty Scalperz** · 09-13-2008, 08:47 PM

I see this as a good situation in a way because he would have to pay your part off within a year and if he doesnt then you can get the home back (of course you would have to go throught he forclosure process and then buy the banks part out on negotiation) but then you would be back in the same position except that the loan would be paid up for another year...

**jasgator5220** · 09-25-2008, 12:24 PM

So long as you have a properly drafted and executed Note and Mortgage and the Mortgage is recorded you would have a 2nd place lien on the property. This is assuming all prior liens are paid off at closing. If the borrower defaults under your note or mortgage you can foreclose. Typically, the property would be sold at a judicial sale and the proceeds would be applied to the banks note first and then to yours.

However, the bigger issue is the market and the amount of debt being placed on the property. If you were to go through with this deal you would be acting in much the same way as the irresponsible banks have been over the past few years. Personally, I would not hold any debt outside of 80% of a properties current appraised value. If this property is in a particularly bad market (e.g. Miami) I would even go lower than that. Note that the bank is only willing to lend 70% and not the typical, once safe, 80%. There is a very real chance, that if the borrower defaults on his obligations to you or the bank, the property may have depreciated to the point where only the bank gets paid and you are left out in the cold.

**fmike630** · 11-22-2008, 10:24 AM

How would I handle this situation.

I have a owner of a very expensive home who wants to fractionalize his property.

He wants to hold the mortgage and split the costs.

He is looking for 4 partners.

Can this be done?