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What many of the posters do not take into consideration.
The REO agreement is 14 years old, and the tenants have faithfully paid all payments. It would be called a seasoned contract, and proof that the tenant was living up to their part of the contract for 14 years.
The aunt made and signed the REO agreement and was apparently happy with the agreement between them, and had gladly received the rental payments and if she had lived would have continued the agreement.
The agreement called for reevaluating the price, every 5 years. Also under Indiana REO laws,if a payment is accepted the contract is automatically extended. At the end of each 5 year period, when she accepted the payment and did not ask for the price to be changed, she was apparently in agreement that the price was still acceptable. The contract has been going on for 14 years. It appears it is another year, before the price has to be renegotiated so the price in the contract is the current value.
The OP inherited an agreement, that is apparently legal, and will control what he his sister can do no matter what they want to happen. They can't just move in and tell the tenant to move so they can sell it someone else.
The only way the contract can be foreclosed on, is if the tenant had not lived up to the contract and made the payments as agreed in the contract.
No Realtor is going to even discuss listing the property, with someone living on the property under a REO contract that has made the payments and lived up to the terms of the contract.
If he wants to try to kick them off of the property, and take it over to sell to someone else, there is going to be one heck of a battle in court, and in cases like that I have seen in the past, the OP and his sister are the ones that will lose and can be very costly to them. There is a possibility that the judge will rule against them, award the tenant their legal fees to be paid by the OP and his sister, plus a possibility of damages.
What the OP needs to do, is talk to an attorney in Indiana that is a specialist in Real Estate Law before they do anything. He needs to do this, before he goes and sees the tenant, so he will understand what he can and cannot do.
To just barge in on the tenant, and start making demands wanting to know what they intend to do, would be the most foolish move he could possibly make with all kinds of ramifications. He needs to know his and his sisters legal rights, before talking to them.
This is something I have seen people in the position of the OP, do and it has bitten them in the rear end and ended up costing them money. They may do as other people in his position have found when they go out uninvited to the property, the tenant may even call 911 and have therm charged with trespass if they do not leave when told to get off the property. The OP may not have the right to drive out to the farm and enter onto the property as it is under the control of the renter, unless he is invited onto the property or allowed under the terms of the contract agreement.
The tenant controls the farm, and the OP and his sister are the landlords, with an agreement for the tenant to pay for the farm and take ownership at some unspecified date, if they so desire. It is time to tread carefully, and get legal advice from a good real estate attorney.
Your make many good points, but there is one statement that I must take issue with. You say " The only way the contract can be foreclosed on, is if the tenant had not lived up to the contract and made the payments as agreed in the contract."
Since this is a rent-to-own or lease-purchase agreement, the tenants could be forced to move if they are unwilling to buy the property. How long before this happens depends on the contract and Indiana laws, but if they are forced to go, they would forfeit the $20,000 deposit that they paid up front as that $20,000 is to be applied to the purchase price, not a security deposit or part of the rent. If a lease-purchaser does not buy for ANY reason, the landlord keeps the deposit. Also, you mention "foreclosure". In cases such as this, the eviction takes place in rent court and no foreclosure process is needed.
However, I believe the OP stated there was a part in the contract that stated they must pay off the price............." when they are able to "
Very stupid on the sellers part to ever use such a vague term in any contract.
Well, not really. It's farmland. The value of farmland is based upon productivity - as in bushels per acre.
The thought being a younger farmer would be able to take an old farm and make it more productive.
Of note, values in all farm land in Indiana is up in 2013. I looked it up.
So, if you were the seller in 1999 - would you want say $50,000..........or the future value worth much more?
My mother and step father resided in Kentucky and owned a farm in Indiana. My mother died in 2008 and my step father died in 2011. They did an informal contract in 1999, hand written with the people living on the farm in Indiana.
They paid my mom 20,000.00 up front and were renting to own. In the hand written agreement it stated that they would procure financing when they could and purchase the property.
They have been making all the payments and no issues with that at all.
In other words, the OP and his sister, have received the payments for two years, with the estate accepting payments on their behalf, shows that the OP and his sister have accepted the terms of the agreement.
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However, I believe the OP stated there was a part in the contract that stated they must pay off the price............." when they are able to "
Very stupid on the sellers part to ever use such a vague term in any contract.
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Wrong. It is not really a rental dispute. On top of that, what would you consider to be a simple eviction when the tenant does not pay rent, etc. It is a contract to purchase dispute, that takes it out a court handling rental problems. I have been in court over rental evictions numerous times when in the commercial/investment business as a Broker. Someone would want to live there but would/could not pay rent. I never lost, and never used an attorney doing it myself. I have taken several law courses through a good University Law Department concerning real estate law so I knew what I was doing.
This is a altogether different thing, as the renter put up $20,000 to fund a REO agreement with the ability to purchase the property at a future date of their choice. As long as they pay the rent, they can not just be foreclosed on and lose the property and the deposit. There is a completely different court, when it involves a form of purchase agreement which would take it to the county court level and quite possibly before a Jury.
Probably put in the contract by the seller. She wanted to get rid of a problem even thinking about the property any longer. There was a long standing renter she trusted. She offered to sell it to the renter, under the terms she did to get a steady cash flow, which the OP says she received as agreed. What we come down to, is the intent of a contract.
It was apparently something the owner wanted. Just give me a steady cash flow, and buy it when and if you can, and between them they came up with the contract. They gave her $20,000 to guarantee that they were serious.
Now normally such a deposit should have been put in an escrow account, and held to the time they bought the property, or forfeited and turned over to the owner if they did not pay the rent, and she had to take over the property.
It appears the $20,000 has been spent and no longer exists. This one fact, will help the renter if it goes to court. If the judge cancelled the contract and forced the renter off of the property, as they have paid the payments as set forth in the contract and not in violation of the terms of the agreement, he/she would order the OP to return the $20,000 to the renter as the renter had lived up to the terms of the agreement. Is the OP able to come up with the $20,000 in cash, before getting the property back.
The OP and his sister, want the property sold to anyone, so they can have some cash. They don't care about what the agreement is/was, they want the cash. Just because the want the cash, does not mean, they can snap their fingers and get the cash.
Going to court to do away with the contract, especially if they have a jury, will probably go in favor of the tenant due to the $20,000 already paid, and the payments being made faithfully. When they have friends who knew about the mothers attention, that will stand up in court and tell the jury that what they are doing was what the mother wanted. Do you think that the friends and neighbors serving on the jury, are going to throw the tenants off the property that they have paid all payments they agreed to, and make them lose the $20,000 they have already paid. Especially when it is to give it to an out of state couple that inherited it.
The simplest way would be to sell the property to the renter, and then give them a mortgage for the difference between the value and the $20,000. They can then sell the mortgage to raise cash. Borrow money against it to raise the cash. One of them buy out the other's half of the mortgage. Or hold the mortgage for an income stream.
nice to see a strong argument on the side of people who put up $20,000 cash
The tenants aren't victims. They paid $20,000 and got something for it. The right to buy the farm. It secured that it wouldn't be sold out to someone else. There was a benefit to them. It would be hunky dory if they do buy as that $20k would be applied to the purchase price. If they can't buy the farm, then they rightfully lose the $20k. That is the point of the rent to own. The OP is not a big bad meanie monster. It's called business. I think the court would consider 14 yrs BEYOND what is reasonable to secure a mortgage.
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Originally Posted by oldtrader
It appears the $20,000 has been spent and no longer exists. This one fact, will help the renter if it goes to court. If the judge cancelled the contract and forced the renter off of the property, as they have paid the payments as set forth in the contract and not in violation of the terms of the agreement, he/she would order the OP to return the $20,000 to the renter as the renter had lived up to the terms of the agreement. Is the OP able to come up with the $20,000 in cash, before getting the property back.
My post above applies to this too. They didn't live up to the agreement if they don't purchase the property. I highly doubt a court is going to cancel a contract..and I also doubt they would order the $20k be paid back. The tenants got what that 20k paid for..for 14 yrs.
The OP and his sister, want the property sold to anyone, so they can have some cash. They don't care about what the agreement is/was, they want the cash. Just because the want the cash, does not mean, they can snap their fingers and get the cash.
Going to court to do away with the contract, especially if they have a jury, will probably go in favor of the tenant due to the $20,000 already paid, and the payments being made faithfully. When they have friends who knew about the mothers attention, that will stand up in court and tell the jury that what they are doing was what the mother wanted. Do you think that the friends and neighbors serving on the jury, are going to throw the tenants off the property that they have paid all payments they agreed to, and make them lose the $20,000 they have already paid. Especially when it is to give it to an out of state couple that inherited it.
Holy Crap at the speculation. I absolutely do not see that the OP just wants the cash and doesn't care about what the contract says. You can make some stuff up. Jeesh!
Something most folks seem to be missing...is that all we know is these tenants paid $20k for the right to buy the farm. Easy enough..they had that and still have it. However, what we don't know yet and what y'all are wildly giving the OP's money away regarding is if there was a rent credit. These folks weren't entitled to live there for free. Another poster picked a random # of 50% to credit. The rent unless otherwise stated is just that..rent. If fair market rent is $1000 mo and they were paying $1000 mo..they don't have jack from it invested in the farm. They just don't, unless they were paying above market rent and that amount is to be applied to the purchase price. The $20k is a separate issue. What I'm curious about is if the contract addresses this.
I agree with Ivoc and JackMichigan on this. I hope the OP ignores a lot of the garbage on here and comes back to update us. It's a very interesting situation.
1. Get an attorney in Indiana. Should also consult with a tax advisor.
2. A formal appraisal will need to be performed on the farm. Assessment doesn't mean squat.
3. Was there a formal will in the first place?????
There is no renter. You have two parties with an installment contract. Vendor (seller) and vendee (buyer).
Sorry but again you have no idea what you are talking about. From everything stated so far it appears to be a rent to own lease and not a land contract. A land or installment contract is an actual sale and requires an agreed to price.
It may well turn out to be no regular form but simply a private contract.
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The rent unless otherwise stated is just that..rent. If fair market rent is $1000 mo and they were paying $1000 mo..they don't have jack from it invested in the farm. They just don't, unless they were paying above market rent and that amount is to be applied to the purchase price. The $20k is a separate issue. What I'm curious about is if the contract addresses this. 
