Introduction

A mortgage, trust deed or land contract is a written contract between a person who has sold property and the person who bought the property.

Taking back financing is a sensible way to sell property and is extremely common all over the United States. In some states they are called Trust Deeds, Contracts for Deeds, Deeds of Trust, Notes or (privately held) Mortgages, but they all represent the same thing: a way of selling property where the Purchaser "borrows" from the Seller rather than paying cash up front or borrowing from a bank. All of these vehicles are referred to as Seller Take Back financing. Let's explore some of the important ingredients in your mortgage, trust deed or land contract now.

Although mortgages, trust deeds and land contracts are relatively simple documents, we suggest you read your documents and this owner's manual once a year. There's no better way to know your rights as well as your options.

For valuable advice on how to sell property using Seller Take Back financing, see "Tips for Selling Property Using Seller Take Back Financing" of this owner's manual. When a property is sold and a Seller Take Back mortgage is used, the Seller, who is now also the Lender, is called the Mortgagee. The Buyer, who is now the Borrower, is called the Mortgagor. When a property is sold using a Seller Take Back Trust Deed, the Seller is the Beneficiary; the Buyer is now the Trustor, and there is a third party who acts as the title holder called the Trustee. When a land contract is being used, the terms Purchaser and Seller are used.

Helpful Hint

On the Payment Record Keeper (see back of this manual), write the Buyer's phone number, particularly if it's an unlisted number. The Buyer's phone number is handy to have in case you need to reach him or her on short notice... if a payment is late, for instance, or if you would like the next payment sent to a summer address.

Legal Description

The Seller agrees to sell to the Purchaser only a carefully described parcel of land, and here is the place in the contract where the property is given its legal description. The city, village, or township of the property is noted, together with the country and state.

Along with the actual "soil" sold, the Seller also conveys such things as any buildings, easements, tenements, hereditaments, improvements and appurtenances. (See the Glossary for a quick definition of these items.) In short, the Seller conveys everything permanently affixed to the property sold.

Helpful Hints

Next to the legal description on your contract, write in the parcel number (also known as a "Tax ID" number or a "Sidwell" number) of the property used by the tax authorities. This makes it easier to check to see if the taxes on the property have been properly paid by the Purchaser each year. An annual call to the treasurer of the county where the property is located is often required in order to find out whether the property payments are up to date. To avoid late payment penalties and the eventual sale of your property by the state for back taxes, make sure to check each year that the property taxes are paid!

Believe it or not, many contracts do not mention the actual street address of the property sold. For future reference, add it here, next the legal description.