Best course of action...

Asked by Jeff Fenner, Chanhassen, MN Sun Jan 11, 2009

We purchased via Contract for Deed property in Chanhassen.
We've been in the contract a year. We bought the contract from the Realtor, who bought the property on Contract from the seller. We paid the Realtor who in turn made payment to the seller. This is a 3 year contract, with balloon in April of 2011.
Four months into the contract the realtor defaulted on payment & I ended up remedying the payment. Realtor since then has refused any & all communication in regards to pulling him out of the equation. At risk is $8K we paid down prior to closing on the contract.
I'm willing to let that go but this does pose a problem when approaching financing as that's 8K counted on when the deal was made. We are looking at attempting to finance before the balloon payment...but our credit isn't where we need it to be yet.
Is there a financing remedy out there that we haven't found that based on our year of timely payments and contract in place would be enough to keep our interest rate low?

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Cindy Hanson…, Agent, Eden Prairie, MN
Tue Jan 20, 2009
Hi Jeff,

Seems like a tough spot.

As far as financing, best to contact several different lenders and see what your options are. If you need referrals, we'd be happy to provide you with several as we work and are based out of Chanhassen.

As far as the contract goes, we have not personally dealt with contracts that are not directly from the first owner...having the middle man there is definately complicating. We would contact a real estate attorney, again we can recommend one locally. Was there a clause in the contract that if one of you defaulted the contract was null and void or any ramifications for it (him defaulting on a payment for example). Was the contract written up by the realtor without a protection clause for you? You may be able to file an ethics complaint against the realtor. You can find more about that a the MN department of commerce website.

Best of luck to you with his hard position.
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Aaron Dickin…, Agent, Champlin, MN
Tue Jan 13, 2009
In addition to contacting a real estate attorney, you can also file an ethics complaint against the REALTOR however it has to filed within 180 days of first knowledge so it sounds like you might be getting close to the end of that term. If he/she has done what you allege, the MN Association of REALTORS will be most interested in hearing your case. I sit on the Professional Standards Committee that hears such cases. Penalties if found guilty can include warnings, fines up to $5000, suspension or forced education classes. The penalties are harsher if they are a repeat offender.

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Cameron Piper, Agent, Forest Lake, MN
Mon Jan 12, 2009

You probably don't want to hear this - but you also need to contact a real estate attorney. Contract for Deed's are complicated matters and you need the advice of someone who can view the entire situation for you and give you solid legal advice. Contracts have certainly been violated here and there are certainly remedies available to you but you need to speak with an attorney about them.

Cameron Piper
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Lenny Frolov, Agent, Brooklyn Park, MN
Sun Jan 11, 2009
Jeff: your situation sounds a little sticky. I would say your best bet is to call a loan officer that deals with FHA as that will probably be your best bet with credit not being at par. If you need a good referal I can certainly give you one, let me know.
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