Free Real Estate Owner Financing Contract

I. Introduction

A. Parties to the Contract

This Owner Financing Contract ("Contract") is entered into on this 25th day of March, 2024, between:

• Seller/Landlord: [Your Name], residing at [Your Address].

• Buyer/Tenant: [Second Party], residing at [Second Party Address].

B. Property Information

The property subject to this Contract is legally described as [Property's Street Address], located at [State / Province], with Parcel Identification Number (PID) [112323099].

C. Purpose of the Contract

The ultimate objective of this Contract is to facilitate the transaction involving the sale of the property which has been previously mentioned, a transaction that is to take place between the Seller and the Buyer. In this particular arrangement, it is the Seller who will provide the necessary financing to the Buyer. The specifics of this financing arrangement, along with all other associated terms, conditions, and stipulations related to the property sale, are detailed and outlined within the clauses and provisions of this Contract.

II. Agreement Terms

A. Purchase Price

1. Total Purchase Price: The total purchase price for the property located at [Your Address] is agreed upon as $[00]. This price reflects the fair market value of the property as determined by a recent appraisal conducted on [Date]. Both parties acknowledge and agree to the accuracy of this valuation.

2. Down Payment Amount: The buyer agrees to make a down payment of $[00] at the closing of this agreement. This down payment demonstrates the buyer's commitment to the purchase and serves to reduce the amount to be financed.

3. Balance to be Financed: The remaining balance of $[00] shall be financed by the seller, payable in accordance with the terms outlined herein. This balance represents the amount owed by the buyer to the seller, inclusive of any applicable interest.

B. Payment Terms

1. Installment Amount: The buyer shall make monthly installment payments of $[00] to the seller, inclusive of principal and interest. These payments are structured to amortize the loan over the agreed-upon financing term, ensuring gradual repayment of the outstanding balance.

2. Frequency of Payments: Payments shall be due on the first day of each month, commencing on [Date], and continuing until the balance is paid in full. This regular payment schedule provides clarity and predictability for both parties, facilitating effective financial planning.

3. Interest Rate: An annual interest rate of [00]% shall apply to the outstanding balance, accruing from the date of this agreement. This interest rate reflects current market conditions and compensates the seller for the opportunity cost of financing the purchase.

4. Late Payment Penalties: In the event of late payments, a late fee of 5% of the overdue amount shall be charged for each month in arrears. This penalty incentivizes timely payments and compensates the seller for any inconvenience or financial loss resulting from late payments.

C. Duration of Financing

1. Length of Financing Term: The financing term shall be for a period of 10 years, commencing on the closing date of this agreement. This timeframe provides the buyer with ample opportunity to repay the financed amount while allowing the seller to receive a steady stream of income over the agreed-upon term.

2. Balloon Payment (if applicable): At the end of the financing term, any remaining balance, commonly referred to as a "balloon payment," shall become due and payable in full. This provision ensures that the buyer has a clear understanding of their financial obligations at the conclusion of the financing period.

D. Title and Ownership

1. Transfer of Title: Upon the execution of this contract and receipt of the down payment, the seller shall transfer legal title of the property to the buyer. The transfer of title shall be executed through a warranty deed, conveying clear and marketable title to the buyer.

2. Conditions for Transfer: The transfer of title is contingent upon the buyer fulfilling all obligations under this agreement, including timely payment of installments and compliance with any other provisions herein. Upon completion of the financing term and full payment of the purchase price, the seller shall execute and deliver the deed to the buyer without encumbrances.

3. Title Insurance: The seller shall provide title insurance to the buyer, ensuring that the property title is free from any defects, liens, or encumbrances, except those expressly disclosed herein or agreed upon by both parties.

E. Property Condition

1. Seller's Representations and Warranties: The seller represents and warrants that, to the best of their knowledge, the property is free from material defects and complies with all applicable building codes, zoning regulations, and environmental laws. The seller further warrants that there are no undisclosed liens, easements, or encumbrances affecting the property.

2. Buyer's Acknowledgment of Property Condition: The buyer acknowledges that they have conducted a thorough inspection of the property or have had the opportunity to do so. The buyer accepts the property in its current condition, "as-is," and acknowledges that no further representations or warranties, express or implied, have been made by the seller regarding the property's condition.

F. Default and Remedies

1. Events of Default: Events constituting default by the buyer include failure to make timely installment payments, breach of any other provisions of this agreement, or any act of insolvency or bankruptcy. The seller may also consider the property abandoned if the buyer vacates the property for an extended period without notice or explanation.

2. Seller's Remedies: In the event of buyer default, the seller may pursue remedies including, but not limited to, acceleration of the remaining balance, termination of this agreement, and retention of all payments made by the buyer as liquidated damages.

3. Buyer's Remedies: If the seller fails to fulfill their obligations under this agreement, the buyer may seek specific performance, damages, or other remedies available at law or in equity.

III. Closing and Execution

A. Closing Date

1. Scheduled Closing Date: The closing of this agreement shall take place on [Date], or such other date as mutually agreed upon by the parties in writing. The closing date marks the formal transfer of ownership from the seller to the buyer and the commencement of the financing arrangement outlined herein.

2. Conditions Precedent to Closing: Before the specified closing date can proceed, the individual who is designated as the buyer within the agreement is legally obligated to meet a number of set conditions that come beforehand. These include being required to issue the payment for the initial down payment, covering any and all other costs that may arise in relation to the closing process, and signing or otherwise executing every document that is pertinent and necessary towards the completion of this process.

B. Closing Costs

1. Allocation of Closing Costs: The closing costs, which encompass a variety of elements such as but not exclusively limited to title insurance, transfer taxes, and fees for recording, are an integral part of the buying process. The allocation of these costs among the parties involved will be directed by the customs that are locally accepted or as the result of a careful negotiation carried out between the individual who is purchasing the property and the individual who is selling the property.

2. Payment Responsibility: Each party involved in this transaction will be obligated to take responsibility for their respective closing costs unless a different agreement has been put down in writing. The buyer in the transaction will have the obligation of covering any costs that are associated with the process of obtaining financing for the purchase. On the other hand, the seller in this situation will be observed to take on the responsibility of covering any and all costs related to the procedure of the property's title transfer.

C. Execution of Documents

1. Signatures of Parties: It is a requirement and an agreement that the buyer and the seller should affix their respective signatures on all the necessary documents that are to be utilized in this process. Such essential documents span an array of legalities, which at a minimum include the primary purchase agreement, along with a promissory note. In addition, they should sign the deed. Other important documents that may require the parties' signatures consist of any duties or pieces of information that need to be disclosed, as commanded by governing laws.

2. Notarization Requirements: It is mandatory for all signatures to undergo the process of notarization to secure the legitimacy and enforceability of the agreement at hand. The act of notarization serves as undeniable proof that verifies the identity of the signatories, confirming that these individuals are indeed who they profess to be. Additionally, it establishes that they entered into the contractual agreement willingly and of their own volition.

D. Delivery of Documents

1. Transfer of Deed: Once the seller has received the full payment for the purchase price, and after all pre-agreed conditions have been met and satisfied, the seller will then perform the act of creating and handing over a legal document, known as a deed. This deed will convey and formally transfer the legal ownership and title of the property in question to the buyer.

2. Recording Requirements: The deed and any other pertinent documents shall be recorded with the appropriate county recorder's office to provide public notice of the transfer of ownership and protect the buyer's interests against any subsequent claims or encumbrances.

E. Possession of Property

1. Transfer of Possession: The individual who currently owns the property will transfer ownership over to the purchaser on the pre-determined closing date. However, this transfer of ownership is contingent on any pre-existing leasing agreements or occupancy rights that may be currently in effect on the property.

2. Date of Occupancy: The individual or entity acting as the buyer in this agreement will be granted full rights to physically take possession and thus fully control the property in question on the predefined date of closing as determined by this contract. This may only be changed or adjusted if both parties come to a mutual agreement on a different date or condition and this revised agreement is properly documented in writing.

If there are any prorated rents or security deposits related to the property at the time of closing, these will be suitably calculated on a pro-rata basis and they will be duly credited to the account of the buyer. This accounting adjustment will happen concurrently with the closing process.

IV. Miscellaneous Provisions

A. Entire Agreement

• Integration Clause: This agreement serves as the complete understanding between the involved parties pertaining to the subject matter described within. It takes precedence over, and effectively replaces, any and all previous agreements and understandings that might have existed between the parties, regardless of whether those agreements or understandings were written or verbally communicated.

B. Amendments

• Process for Amendments: In order for any amendments to the present agreement to be considered as valid and enforceable, it is obligatory for them to be transformed into written form. In addition, the signatures of both parties involved are required. It should be noted that no modifications made orally will hold any binding force upon either of the parties under any circumstances.

C. Severability

• Invalidity of Provisions: Should a court of competent jurisdiction find any provision or clause of this agreement to be invalid, illegal, or incapable of being enforced as a result of any legal implications or limitations, the remaining clauses or provisions of the agreement, which are valid, legal, enforceable, and unbroken, will remain unaffected and unimpaired by the implications of the aforementioned invalid, illegal, or unenforceable provision or clause. The effectiveness and execution of these remaining, valid provisions will continue as planned, regardless of the specific provision rendered unenforceable by the court.

D. Waiver

• Waiver of Rights and Remedies: Should either party involved fail to enforce any provision contained within this agreement, such failure should not be interpreted as a waiver of that particular provision. Furthermore, it should not be considered as a relinquishment or abdication of any other rights or remedies that they are entitled to, as provided by this agreement or as per the stipulations of the law.

E. Notices

• Method of Giving Notice: This agreement stipulates that all notices, whether required or permitted, must be made in writing. They can be delivered in a variety of ways. One way is personal delivery directly to the intended party. Another acceptable method is by sending the written notice through registered or certified mail. The notices can also be transmitted electronically via email. The appropriate addresses for delivery or transmission of these notices are the respective addresses that the parties have provided within the contents of this agreement. In case these addresses change over time, the respective party is expected to designate their new address in writing subsequently.

F. Attorney’s Fees

• Recovery of Attorney’s Fees in Disputes: Should a dispute ever arise out of, or in relation to, this agreement, the party that ultimately prevails in resolving the dispute will have the right to recoup any reasonable costs related to attorney’s fees that they had to bear. This claim to financial recovery also extends to any additional expenditures that were necessitated in relation to the dispute, including costs incurred during proceedings that concern an appeal or enforcement of the agreement.

G. Confidentiality

• Non-Disclosure of Contract Terms: Both parties involved in this agreement mutually agree to maintain the confidentiality of the terms and conditions encompassed within this agreement. Neither party shall disclose or discuss these terms and conditions to any third party without first obtaining written consent from the other party involved in the agreement. However, if, and only if required by law enforcement or a lawful legal process, one or both parties may release these details in accordance with those legal requirements.

V. Signatures

A. Seller/Landlord Signature

I, [Seller's Name], hereby acknowledge and agree to the terms and conditions outlined in this Real Estate Owner Financing Contract. I understand that by signing this agreement, I am legally bound to fulfill my obligations as the seller, including the transfer of title and receipt of installment payments in accordance with the agreed-upon terms.

[Date]

B. Buyer/Tenant Signature

I, [Buyer's Name], hereby acknowledge and agree to the terms and conditions outlined in this Real Estate Owner Financing Contract. I understand that by signing this agreement, I am legally bound to fulfill my obligations as the buyer, including making timely installment payments and complying with all other provisions set forth herein.

[Date]

C. Witness Signatures

I, the undersigned witness, certify that I witnessed the signing of this Real Estate Owner Financing Contract by [Seller's Name] and [Buyer's Name]. I affirm that the signatures appearing above are genuine and that each party signed this agreement willingly and voluntarily.

[Date]

Real Estate Templates @ Template.net