New Minnesota law puts light on contract for deed

  • Article by: JEFFREY MEITRODT , Star Tribune
  • Updated: July 5, 2013 - 9:43 AM

New legislation will alert Minnesota home buyers to pros, cons of such sales.

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sek2undrstndJul. 4, 1310:13 PM

Buyers also need to be skeptical in every phase of buying real estate. From their mortgage company, their title company, their real estate person, the other real estate person selling the property. My children have recently purchased new homes. In one, the real estate agent who was selling the home had misstated the size of the house by almost 1000 square feet. Buyers beware: bring your tape measure to every home you look at and verify the measurements of the living space.

jojoobooJul. 4, 1311:08 PM

An appraisal isn't necessary to know the tax value of a property. At least in Hennepin County, anyone can look that up online. The tax value also may differ substantially from the actual value so I'm not sure it matters if the home price was "56 percent more than the city thought the property was worth."

maddyinmplsJul. 4, 1311:42 PM

Yet another law on the books that is there because of people's own stupidity.

jjminblzrJul. 4, 1311:55 PM

It takes two to make a deal! Contract for Deeds are one of the tools in the tool bag used to finance real estate. The problem is generally with the buyers who have little or no consumer education, training, or street smarts. Many times these buyers have terrible credit scores, suspicious work and employment history, and possible suspicious civil and criminal court histories. The seller receives a down payment, maybe a usury interest rate, which allows the seller to think he will get the house back. Contract for Deeds take very little time to cancel compared to Mortgages. However, based on some of the people who buy, the house will be in worse shape when the Contract is canceled that when the house was sold to this buyer. If there is blame to be assessed, it belongs with the uninformed buyers who did not use professionals to consummate the transaction. This would include, but not be limited to licensed real estate agents, real estate attorneys, real estate appraisers, bankers/lenders, home inspectors, septic and well inspectors (for the rural buyers) HVAC, electrician, and other professionals any and all buyers should rely on for expertise with their purchase. The law will help but only for those that want some help with the decision!

kgk2Jul. 5, 1312:01 AM

I understand it to an extent, but more or less this law is to guard against buyers that don't do the full research on a property. Its an old argument but what about personal responsibility. If the house you are buying has liens on it. It is not difficult to find that information

bigtmnJul. 5, 1312:11 AM

I would never buy a home without consulting with an attorney. A few hundred dollars can prevent a lot of heartache.

owatonnabillJul. 5, 13 5:55 AM

Owatonnabill knows very little about real estate. But even he knows that if you're gonna be signing a contract that may approach or even surpass six figures, then getting the advice of people who specialize in such things is essential. All the laws ever passed will not legislate away stupidity.

jcinmnJul. 5, 13 6:03 AM

maddyinmpls "Yet another law on the books that is there because of people's own stupidity." Substitute GREED for stupidity!

minneg56Jul. 5, 13 6:16 AM

Financing real estate transactions costs money! You either pay a real estate attorney (bare minimum) for representaton in a 'privately funded' transaction/ contract for deed -or pay the costs and incur the time it takes for a traditional mortgage approval. 'Traditional' financing can be a lengthy and expensive process with good reason. The borrower is asking a bank or mortgage company for money which the borrower doesn't have! Contrary to popular belief, LENDERS incur considerable expense just in taking an application -let alone processing it, putting it in front of an underwriter 3-5 times AND incurring the risk of being compliant with oppressive lending regulations every step of the way. Contracts for deed can be some of the simplest of real estate transactions. But agreeing to a finacial transaction in buying a piece of real estate isn't a transaction a novice should take on without representation.

nihil55Jul. 5, 13 6:47 AM

The fine seems minimal compared to what an unscrupulous seller has to gain.


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