Is this land sale on the up and up? (flat fee, for sale)

[ILUVMAINE]

Hello all my dear Maine friends who know what's what in the real estate world in Maine! I won't tell my source - against CD rules, but there's some Maine property for sale at a certain site and I don't understand what a "warranty deed" means OR what they mean by a "good title is guaranteed". Any help some of you experts can offer would be greatly appreciated before I buy a pig in a poke!

36+/- acre tract of land. The buyer will be provided with a $29,900 loan at 9.9% interest for 20 years with monthly payments of only $286.56 per month. There is no prepayment penalty on the loan, so pay it off early or refinance at any time. After three years of good payment history on the Land Contract, you will be issued a Warranty Deed and I will retain a mortgage for the outstanding loan amount. GOOD TITLE IS GUARANTEED! The total purchase price is determined by ADDING the downpayment to the $29,900 loan amount. In many parts of the country you can't buy a quarter acre lot for this low of a price, and yet you are getting this huge tract for this one low price. The high bidder must either "beam" the downpayment using paypal.com (major credit cards accepted) or overnight a cashiers check within 48 hours of the close of the auction. Because this land is being sold so inexpensively, the land is being sold "as-is where-is" with no warranties either expressed or implied. Buyers are required to perform all due diligence prior to purchasing.

[Cornerguy1]

Good title is guaranteed

but

the land is being sold "as-is where-is" with no warranties either expressed or implied. Buyers are required to perform all due diligence prior to purchasing.

ROFLMAO

Seems a tad contradictory, doesn't it?

[ILUVMAINE]

Seems a tad contradictory, doesn't it?[/quote]

Thanks CornerGuy! Perhaps that is where I was getting confused too!
Thanks so very much for your input!

You know what "they" say - if it sounds too good to be true......

[Acadianlion]

The land ad is issued by either an amateur or a crook. Probably an amateur I'll say because I am feeling nice this morning. There are some keys here. First of all, the seller is offering 100% financing, but is asking for a downpayment. The "vehicle" being established to begin with is something called a "Land Contract". I dunno what that is, but what the seller is really offering to do is establish some sort of lease with option to purchase at the end of three years. Note that actual ownership of the land doesn't transfer until the three years of payments are completed, and if you run the payment numbers on the loan, over the first three years practically no principal is paid. So the buyer gets to pay a LOT of interest and then finance practically the entire amount assuming that the buyer can arrange a mortgage. This is like "buy here, pay here: no money down" in a used car lot.

As strange as the ad sounds, it might be real. A whole lot of years ago, I bought a business with essentially no money down, and the business included an office building. The terms of the payment were so much a month for twelve months, and then the mortgage began, with owner financing. It was VERY carefully set up by all sorts of legal work though, and the only "no warranty" part was from me, because at the time nobody but nobody knew for sure whether or not I could not only continue to run the business, but make it grow so that it could survive the first year. The actual downpayment was $25,000, and that was paid out over twelve months. On the day that the contracts were signed, I made a cash downpayment of $100, and in point of fact, in my checkbook was the princely sum of $67.76. I did have some accounts receivables and a credit line, so the check was "good", but as far as actually having $100 to hold in my hand at one time, I had $67.76 in hard currency. The seller needed to sell and the buyer needed to buy so the deal worked, but it took big cojones to make it work: I bought the business and moved to town on the same day having NO history there at all, and knowing less about the place.

A warranty deed means that the seller is "warranting" that the title to the land is clear, clean and that the amount of land is essentially as described in the deed. He is further more "warranting" that he will defend that title should a challenge arise. I really doubt that this is what he means. Unless he has surveyed the parcel and had the necessary legal title work done, he won't be really issue a warranty deed. Normally a quit claim deed with covenants will be what is issued at time of actual sale.

I think from a tax standpoint there are major issues with this deal. Without actually seeing the document, the "land contract" seems merely to be a lease, but it isn't stated as such, so I am not sure if the interest can be deducted for income tax purposes.

Is this ALL of the description? I think by "as is, where is and no warranties" means that there is NO guarantee that there really IS the acreage advertised, no warranty that the land is suitable for anything, nor that the buyer can even legally get to the land.

In the end, I suspect that this land is not really in Maine at all, but is located in New York, right next to a certain bridge that has been rumored to be for sale off and on for many, many years.

[Northern Maine Land Man]

ILUVMAINE, Please PM me the link. I'd like to learn more about this. It sounds a whole lot like the guy that Forest Beekeeper knows.

[tcrackly]

Does sound suspect. "No warranties either expressed or implied" yet, " Good title is guaranteed". Only a thorough title search can guarantee the property is yours or theirs to sell. Besides , I understood that any land mortgage or purchase contract issues you a deed in the purchaser's name upon signing the contract.
Pretty scary scenario.

[Northern Maine Land Man]

Nope. You can buy land under a "contract for deed" or "and installment contract". It's the same thing. You get your deed when the land is paid off. The practice used to be common, but is seldom done today.

[Submariner]

The guy that I bought land from does not do financing.

Yes land sells for under $1k per acre, sometimes far less than $1k per acre. But when last he and I spoke he was not willing to deal with financing.

His desire is to sign a quit claim deed and file it. If the buyer wants any further level of 'legalness' to the deed, then the buyer can pay for the added legalness. I hired a land transaction lawyer, who did the title search, title insurance, re-typed the deed and filed it. This service is commonly done for a flat fee of $200.

I have heard of: "contract deeds" and "installment contracts". Folks shake hands on a contract, payments are made and when the payments are done, you get a clean deed. No banks, no computers, no big deal.

I have also heard of the contract where the seller gets to stay on the property and the buyer makes payments until the seller dies. It was common among share-croppers. My father did one like that. We share-cropped their land, while the previous farmer stayed in the house.

Some folks dont like banks. Banks fold.

Some folks don't like lawyers, lawyers run for political offices, so they are obviously crooks. [not that I am saying all lawyers are crooks, some of my best friends have been crooks.]