Expert: Connie Wildasinn-Broker,GRI,Realtor® - 5/21/2009

Question
QUESTION: my ? is: if I own a house but I'm currently making payments on it and I own 95% of the morgage can I sell to somebody else in rent to own contract? and how much of the rent will go to the pricipal?

ANSWER: Congratulations on still having equity in your property!... yes you can sell ‘rent-to-own’, but check your note/mortgage for the 'due on clause’ what you are really doing is an AITD "All Inclusive Trust Deed" where you still own the debt but are selling the property in actuality ... tricky... check with your lawyer...

In addition, you will want to collect more that the mortgage payment, you should be including the taxes and insurance, and a principle dollar amount to apply to the down payment… the person purchasing, must at the end of the option have the ability to buy a loan thus securing the property and transferring title into their name… this is not something the layperson should try to accomplish on his/her own… contact those you know in the financial world and get some one on one advise to your particulars…

Good luck


---------- FOLLOW-UP ----------

QUESTION: Hello there! here is my ? I do have a house the I'm currently making payments on it but, I'm not leaving in it. and is currently for sale. I have a client that is interesting on buying the house but in a land contract agreement. is possible to sell this house in a land contract as the mortgage in this house is not pay off yet?

Answer
Hi Sofia,

I don't know what state you are in, so please check with your lawyer... the land contract is simple enough ... you become the bank and carry the note and the buyer pays you... in California we call that an All Inclusive Trust Deed... keep in mind most, most not all, loans have a 'due on sale' clause... so that any time you are trying to transfer the title the prior banks wants to be paid in full and reconvey the property back... it is to protect their investment...they made the agreement with you not the new buyer... most times these are done because the buyers has poor credit and can not obtain a traditional loan... just be sure you know who you are skipping down the street with... know your pros and cons and how, and what you have to do to take the property back if they decide they don't want the house after moving in and 'taking possession'... you may end up in a legal battle you never intended...

Is a straight sale not possible? keeps is cleaner especially in a down market... the chances of the buyer being able to refinance and get a new mortgage are probable of being harder in a couple years not easier... and the house price could be worth even less... food for thought

Good luck!