Expert: Dick Dennis - 7/20/2009

Question
I am the executor of my parents estate.  There is a house involved and my nephew has expressed interest in purchasing from the estate.  We would be financing him as he has horrible credit. I have no idea how to proceed in this. What has to be done to complete this process?

thank you for your assistance.


Answer
In what state is the house located, Annie? It does make a difference. In some states when the seller of a property finances the sale, it is a note and deed of trust. In some states it is a mortgage. Each state has different remedies to correct defaults by the payor or what the seller must do upon being paid completely at the end.

With a note and trust deed, the person buying the property signs the note as evidence of actually owing the money agreed upon. The trust deed is the instrument actually recorded in the county records that is evidence that the note is owed by the new owner of the property.

With a mortgage, it is recorded as the full evidence of debt. In both cases, as long as the payments are made as agreed, then everybody is happy as the seller (beneficiary) receives the payments as agreed and the buyer (trustor or mortgagor) continues to live there.

The difference between the value of the property and what is owed on the trust deed or mortgage is called the equity owned by the homeowner. So, the equity is never really determined until the property is sold by the homeowner to a buyer.

I may be able to help you in this if the property is located in California. Otherwise, I advise that you consult with a local REAL ESTATE attorney to help you put this matter together. That person should also explain everything to you, like, what your obligation is as beneficiary and what the buyer's responsibility as obligor.

I do wish you well, Annie.

Dick Dennis
dixiedee13@aol.com