This preview shows page 1. Sign up to view the full content.
Unformatted text preview: itle. To retain favorable trust deed loans existing on a property which vendor would regain in the event of repossession. Safeguards – Both vendor and vendee should be alert to the possibility of the lender's enforcement of a due–on–sale clause, the requirement of a disclosure statement, and the advisability of a review of the transaction by an attorney. DISADVANTAGES
Because title is not conveyed by a land contract in the usual manner, there are a number of possible complications. If the vendee defaults and refuses to move or pay, the vendor must file court action. Court action is required for the vendor to regain clear title when the contract is recorded and the buyer defaults and refuses to record a release. Title may be subject to mechanics or other liens. The contract may prohibit assignment by the vendee.
Dynasty School (www.dynastySchool.com) 9-45 REAL ESTATE FINANCE
The vendee's equitable interest is not attractive security for loans. The vendee might receive defective title or no title at all upon conclusion of the contract. The vendee may be faced with expensive court proceedings to acquire title if the vendor dies or becomes incompetent or bankrupt. REMEDIES FOR DEFAULT
If the vendee defaults, the vendor may: Sue for specific performance Sue for damages. Agree to rescind. Bring “quiet title action” in court' if title is clouded Attempt to declare a forfeiture and retain money paid as liquidated damages. (Court allows reasonable damages only.) GRADUATED PAYMENT MORTGAGE (FHA 245)
A graduated payment mortgage loan is a fixed rate loan on which the monthly payments begin at a level lower than that of a level payment fixed–rate loan. During a period the length of which is fixed at loan origination (the graduation period), the monthly payment amount gradually rises to a level sufficient to amortize the remaining principal balance over the remaining term of the loan. A GPM provides that monthly payments are initially lower in the first 5 to 10 years with a gradual annual increase to a predetermined point, after which they remain constant. The graduation periods, the rate of increase, and...
View Full Document
This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10