When a buyer cannot or would rather not use a bank, the seller can carry the financing. Done right, an owner-carry sale protects the seller’s security and spreads the tax over the years the payments come in. Done wrong, it leaves the seller with a buyer in default and the whole tax bill in year one. I draft and review these deals with the legal side and the tax side both in view.
What I handle:
- Land sale contracts, and promissory notes secured by a trust deed, with the terms a seller needs: interest, payment schedule, balloon payment, late charges, and remedies on default
- Deeds, escrow instructions, and a collection escrow so every payment is tracked
- Installment sale tax reporting, so the seller’s gain is spread over the years of payments rather than taxed all at once
- Sales between family members, including the interest rate and gift questions that come with them
- FIRPTA withholding when the seller is not a U.S. person
- Default and workouts: forfeiture, foreclosure, and renegotiating terms when the buyer falls behind
- Fitting the contract into the seller’s estate plan, so the payments and the security pass to the right people