Real estate sales can be financed countless ways above and beyond traditional bank loans. Private loans, family loans, seller financing and other creative devices are not uncommon, perfectly legal, and provide exceptional opportunities.
We are experts in California intra-family transactions, family gifting and family sales of real estate, utilizing all aspects of Propositions 13, 58 and 193 to ensure the lowest tax consequence possible. Review our in-depth article on family transactions here.
Private party sales can use similar lending devices, often called “seller financing”, whereby the purchaser places a down payment (similar to that of a traditional loan), but the seller then agrees to take monthly payments directly from the buyer with no additional payment required at the time of sale. The seller then records a security interest against the title of the property (similar to how a traditional bank loan would). This presumes, of course, the seller has no loan on the property or can otherwise pay off any existing loan prior to the sale to a the buyer. All terms are negotiable (keeping in mind potential state usury laws) and loans can be 30 years, but are more often shorter-term (i.e. five or 10 years), with a “balloon payment” due at the end. Buyers often enter these arrangements presuming they will refinance or sell in that timeframe; but the failure to obtain new financing prior to the loan deadline could result in a foreclosure by the original seller.
To discuss your private party or family real estate transaction, contact our office. If you are ready to proceed with a consultation, you can book directly by clicking here.