Owner Financed Sales Contract for the United States

Owner Financed Sales Contract Template for United States

An Owner Financed Sales Contract is a legal agreement used in the United States where the property seller provides direct financing to the buyer instead of the buyer obtaining a traditional mortgage through a bank. This document outlines the terms of sale, including purchase price, down payment, interest rate, payment schedule, and security interests. It must comply with federal regulations such as the Truth in Lending Act and state-specific requirements regarding usury laws and real estate transactions.

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What is a Owner Financed Sales Contract?

The Owner Financed Sales Contract serves as an alternative financing method in U.S. real estate transactions when traditional bank financing is not preferred or available. This contract is particularly useful for sellers willing to accept periodic payments and buyers who may not qualify for conventional mortgages or prefer flexible terms. The document includes crucial elements such as property description, purchase price, payment terms, interest rates, security arrangements, and default provisions, all while ensuring compliance with federal and state-specific lending regulations. It's essential to note that these agreements must adhere to various legal requirements, including the Dodd-Frank Act and state usury laws.

What sections should be included in a Owner Financed Sales Contract?

1. Parties: Identifies the seller (owner-financier) and buyer with full legal names and addresses

2. Background: Describes the property being sold and intention to create owner financing arrangement

3. Definitions: Defines key terms used throughout the contract including Property, Purchase Price, Down Payment, etc.

4. Purchase Price and Payment Terms: Details the total purchase price, down payment, interest rate, and payment schedule

5. Security Interest: Establishes the seller's security interest in the property until full payment

6. Default Provisions: Specifies what constitutes default and remedies available

7. Transfer of Title: Conditions for final transfer of title upon completion of payments

What sections are optional to include in a Owner Financed Sales Contract?

1. Insurance Requirements: Details required insurance coverage for the property and maintenance of such insurance throughout the contract term

2. Property Maintenance: Specifies buyer's obligations regarding property upkeep and maintenance standards during the financing period

3. Early Payment Provisions: Terms and conditions for early payoff or additional payments, including any prepayment penalties or benefits

4. Due-on-Sale Clause: Provisions restricting buyer's ability to sell or transfer property before full payment is made

What schedules should be included in a Owner Financed Sales Contract?

1. Schedule A - Property Description: Detailed legal description of the property including boundaries, easements, and improvements

2. Schedule B - Payment Schedule: Amortization table showing complete breakdown of payments, including principal and interest allocations

3. Schedule C - Property Inspection Report: Comprehensive documentation of property condition at time of sale, including photographs and expert assessment

4. Schedule D - Title Search Results: Evidence of clear title and documentation of any existing liens or encumbrances

5. Schedule E - Required Disclosures: Compilation of all state-specific required disclosures and forms

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Cost

Free to use

Relevant legal definitions

Clauses

Relevant Industries

Real Estate
Construction
Agriculture
Commercial Property

Relevant Teams

Real Estate
Legal
Finance
Property Management
Risk Management
Operations
Compliance
Asset Management

Relevant Roles

Real Estate Agent
Property Manager
Real Estate Attorney
Title Officer
Mortgage Broker
Real Estate Investor
Property Developer
Financial Advisor

Industries

Truth in Lending Act (TILA): Federal law requiring lenders to provide standardized disclosures about loan terms and costs

Dodd-Frank Act: Federal regulations governing seller financing and requirements for loan origination

SAFE Act: Federal law establishing minimum standards for state licensing of mortgage loan originators

Equal Credit Opportunity Act: Federal law prohibiting discrimination in credit transactions based on race, color, religion, national origin, sex, marital status, age, or public assistance status

Fair Housing Act: Federal law prohibiting discrimination in real estate transactions based on protected classes

State Usury Laws: State-specific regulations setting maximum legal interest rates for loans and penalties for exceeding them

State Disclosure Requirements: State-mandated disclosures that must be provided to buyers in real estate transactions

State Contract Laws: State-specific requirements for valid contract formation, execution, and enforcement

State Real Estate Laws: State regulations governing real estate transactions, including seller financing requirements

State Recording Requirements: State rules for properly recording real estate documents and securing legal interests

State Foreclosure Laws: State procedures and requirements for foreclosure in case of default

Uniform Commercial Code: Standardized laws governing commercial transactions, relevant if personal property is included in the sale

Local Zoning Regulations: Municipal or county rules affecting property use and transfer

Property Tax Regulations: Local and state rules regarding property tax assessment, payment, and proration

Insurance Requirements: Mandatory insurance coverage and requirements for financed properties

Due-on-Sale Clauses: Provisions in existing mortgages that may affect seller financing arrangements

Title Search Requirements: Legal requirements for verifying clean title and ensuring proper ownership transfer

Payment Terms Documentation: Requirements for documenting payment schedules, interest rates, and amortization

Default Provisions: Legal requirements for specifying default conditions and remedies in the contract

Notice Requirements: Legal requirements for proper notification procedures in various contract situations

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A U.S.-law governed agreement detailing terms and conditions for the sale and purchase of assets, shares, or business, including price, warranties, and closing conditions.

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What is a Owner Financed Sales Contract?

What sections should be included in a Owner Financed Sales Contract?

What sections are optional to include in a Owner Financed Sales Contract?

What schedules should be included in a Owner Financed Sales Contract?

Authors

Alex Denne

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