I am currently working on a tricky land contract. Always have an attorney go over the paperwork and make sure they are always handled through the title company and drawn up on the correct real estate forms for your state.

Rely on the advice of your attorney. I'm not an attorney, so this isn't legal advice.

When the deed is actually conveyed, it needs to be free of any liens or mortgages. Up to that point, however, just as with a lease-option, the property can have a mortgage or lien on it. (A mortgage is just a form of lien.)

Since your parents have a lien, they can free you from the lien. And they can apply the lien to the new property that you'd buy. That's typically just some simple paperwork that your lawyer can help you with. And while there might be different strategies on the timing, the one that occurs to me is that when you purchase the new property, your parents would free you from the lien on the old property and apply a lien in an equal amount to the new property.

Now, having said that, check with a mortgage broker as well to determine how to get the "most bang for your buck" regarding removal of the lien and placement of it. Again, though, any competent mortgage broker should be able to help.

Good luck.

Definitely let your attorney handle this one. You did not specify what the lien entails. If your debt to them is secured by your home, than you don't really own it free and clear. It is possible to sell on a land sales contract with the lien still in place, but most buyer's will balk at that. I would suggest that you go ahead and move the lien to your next purchase which should not be too complicated, and will give buyers peace of mind that they will not be held liable if you default on your debt to your parents.
Best Wishes,
Joanne Graham

Rely on the advice of your lawyer.
Here is something to think about. If you own the property free and clear, except for the lien your parents hold - the new owners will be taking on a risk when they make good faith payments to you. You will want to disclose that risk, of course.
If everyone does what they have promised (buyer make payments to you, you clear up the lien with your parents), this can be a simple path to a transition of ownership.
The problems always come when someone fails to make good on a promise, so make sure the downside is protected for all parties.

Dude...

Hmmm...

Home is free and clear but you owe Mom and dad.

Want to sell yours on a contract to a new buyer and leave that on there. You would be holding the contract for the new buyers.....they would be buying it subject to that underlying lien....

Ok. yes. Leave the lien there. The attorney in the contract can attach a copy of the preliminary title and have the buyers acknowledge that they are aware of it. Than have language that they pay you and you pay the underlying and that as a term of the contract that the lien will be paid off as a condition of the new buyer paying you off.

Ultimately you want disclosure and accountability to all parties. Have them pay the monthly payment they owe you into a collection escrow and than pay your folks right out of that before you get paid. Also have your folks sign a satisfaction or reconveyance document and place it into the escrow so that they are all set when they get paid off...no fuss no muss... buyer gets the free and clear deed; your folks get paid off and the balance goes to you!

Very nice and neat. Done deal.

Good question. I liked it ! :]

Have a great night.

Regards;

Dirk Knudsen
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