In real estate, what is a owner financed sale a/k/a “a contract for deed”?

In real estate, what is a owner financed sale a/k/a “a contract for deed”?

There are different ways to finance the purchase of a piece of property, i.e. a home. Recently, I have been getting more questions and handling more deals for owner financed sales, a/k/a contract for deed transactions. Simply put, a contract for deed is when the seller of the property will act like the bank and finance the deal for the buyer. Based on the contract terms, the buyer is usually allowed to move into the house immediately and make payments directly to the seller to be applied toward the purchase price. The loan term is typically 30 years but the buyer only pays the seller for 3 to 5 years and at the end of that term must pay off the balance of the purchase price with a traditional mortgage (the balloon payment). This is a great strategy if the buyer’s credit is not quite good enough to qualify for a mortgage but should be in a few years. Helpful Tips If you are in the process of entering a contract for deed transaction (buyer or seller), here are some important items to think about before signing on the dotted line: The purchaser does not own the property until they pay off the full amount per the contract. The contract must specify which party will pay real estate taxes during the contract period (as well as who gets to claim the property for tax purposes). The parties must decide who is responsible for maintaining homeowner’s insurance. The last thing you would want is for your homeowner’s insurance to lapse. Without a bank paying the insurance out of an escrow...
Is there a minimum net worth you should have before making a will?

Is there a minimum net worth you should have before making a will?

As an estate-planning attorney I am often asked by potential clients, when should I make a will?  The simplest explanation that I give is: if you have anything of value and you want to leave it to a specific person. Long story short, if you own anything of value, if you die without a will, your estate is distributed according to the state’s rules. No one in your family has a say and they must follow the rules. Now, if you are married and you are the first to die, that makes it slightly easier in that everything other than jointly owned assets goes one-half to your spouse and one-half to your children in equal shares. If you have no children then everything goes to your spouse. Unfortunately, we do not live in a perfect world and things don’t always go according to plan. What happens if you are the second to die and you have three kids from two different marriages? Who would get what possessions? Or, you are divorced and never re-married? There are many scenarios that I have had to deal with as a probate attorney. One thing my probate clients often tell me is they wish their loved one had seen me for an estate plan before they passed away. As a parent myself, the reason why I drafted my personal estate plan was so that I could name guardians for my child in the event my husband and I pass away before she becomes 18. My child is the most valuable “thing” in my life, and if something were to happen to my husband...
How to answer the number 1 question for parents:  Who should I choose to be the guardian of my child?

How to answer the number 1 question for parents: Who should I choose to be the guardian of my child?

A guardian is a person who looks after and is legally responsible for someone who is unable to manage his or her own affairs. There are three main situations when a guardian may be needed: for a disabled person, an elderly person who is no longer able to care for themselves, or a child under 18 whose both parents become incapacitated or are deceased. When I draft estate plans for my clients and they have children younger than 18 years old, I always recommend a provision be added to the wills that if something should happen to both parents, a guardian is named to care for the children. In the state of Illinois, if one parent becomes incapacitated or dies, the other parent typically becomes the sole custodian of the children. When having your wills drafted you must consider who would take guardianship of the children in the event both parents die at the same time. This person will make all future decisions for the children. This can be a very difficult question to answer. When I am counseling people to help them decide, there are a few points that I present for consideration. First, I recommend choosing potential guardians who are not substantially older than the parents. Young clients commonly want to choose the child’s grandparents, however, historically speaking, the grandparents will become incapacitated or die before the parents, or before the grandchildren would attain the age 18. Second, I recommend choosing someone who lives a similar lifestyle. Having your parents disappear is hard enough on the children. You want this difficult transition to be as easy as...