Owner Carry Real Estate Process

Summary

Owner carry, or owner financing, involves the seller creating a new loan agreement with the buyer. The seller transfers the property title but retains a lien until the loan is repaid. If the seller has an existing loan, they remain responsible for it, often using a wraparound mortgage. The buyer typically handles taxes and insurance, either reimbursing the seller or setting up their own escrow account. Agreements should clearly outline responsibilities and be drafted by a real estate attorney. Consult local legal resources for personalized advice.

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Which part of the owner carry process would you like more details about? For example, the legal documents, escrow services, or default terms?

All of that

Here’s more detail on each part of the owner carry (owner financing) process:

Legal Documents:
- Promissory Note: This outlines the loan terms, including the amount borrowed, interest rate, term, and repayment schedule.
- Deed of Trust/Mortgage: Secures the property as collateral for the loan. It gives the seller lien rights if the buyer defaults.
- Purchase Agreement: Specifies the terms of the sale, including owner-financing provisions.
- Legal Review: Use a real estate attorney to draft and review all documents to ensure compliance with Arizona laws.

Escrow Services:
- Payment Handling: An escrow company can manage loan payments, ensuring they’re properly recorded.
- Document Storage: Escrow may hold important documents and release them once the loan is repaid.
- Neutral Party: Escrow ensures both parties follow the agreement terms.

Default Terms:
- Penalties: Define late fees or interest on missed payments.
- Remedies: Outline what happens if the buyer fails to pay (e.g., foreclosure or repossession).
- Cure Period: Allow a grace period for the buyer to address missed payments before further action is taken.
Would you like to know how to find a real estate attorney or escrow company near you?

Are there any real estate attorneys that are pro bono?

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Pro bono real estate attorneys are rare, as real estate issues often involve financial transactions. You may find assistance through:
- Legal Aid Organizations: Groups like Community Legal Services in Arizona offer free services for low-income individuals.
- Law Schools: Some provide free legal clinics.
- Bar Associations: Check the Arizona State Bar for referrals.
Would you like contact details for any of these?

Yea

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Legal aid might help, but pro bono real estate attorneys are uncommon. Here's how you can proceed for help in Arizona:

Community Legal Services

Phone: (*) *-*
Website: clsaz.org
You can also check the Arizona State Bar's referral service for affordable options. Would you like links for that?

Please

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Here’s the link for the Arizona State Bar’s referral service: [azbar.org/for-the-public](https://www.azbar.org/for-the-public). They can help connect you to affordable or low-cost legal services. Let me know if you need anything else!

Is Owner Carrie different than subject two loans?

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Yes, "Owner Carry" (owner financing) is different from "Subject To" loans in real estate:
- Owner Carry: The seller finances the buyer directly, often creating a new loan agreement.
- Subject To: The buyer takes over the seller's existing loan payments but the loan stays in the seller's name.
Let me know if you'd like more details!

So then, how does the owner Carrie work? Does the loan stay in the owner’s name or how do they do that?

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In an "Owner Carry" (owner financing) arrangement, the loan does not stay in the seller's name. Instead:
- The seller creates a new loan agreement with the buyer.
- The buyer makes payments directly to the seller.
- The seller transfers the property title to the buyer but keeps a lien until the loan is repaid.
Would you like more on how liens or payments are structured?

Yes

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Liens and payments in an owner carry (owner financing) deal typically work like this:
- Lien: The seller holds a lien on the property as collateral. If the buyer defaults, the seller can foreclose.
- Payments: The buyer pays the seller directly, often monthly, per the agreed schedule.
Would you like more details about foreclosure or payment terms?

If the seller has an existing loan, how does that work? Do they keep paying the original loan or I’m confused?

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If the seller has an existing loan in an "Owner Carry" deal, it can get complicated. Typically:
- The seller remains responsible for paying their original loan.
- The buyer pays the seller under the owner financing terms.
- This is often structured as a "wraparound mortgage," combining both loans.
Would you like more details on wraparound mortgages?

Yes

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A wraparound mortgage works like this:
- The seller keeps paying their original loan.
- The buyer makes payments to the seller under the agreed terms.
- The seller uses the buyer's payments to cover the original loan and keeps any difference.
Would you like to know the risks or legal steps involved?

So then is the buyer responsible for taxes and insurance and how does that work if the seller has an escrow account that uses that money to pay for taxes insurance

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In an owner carry deal, the buyer is typically responsible for property taxes and insurance. If the seller has an escrow account:
- The buyer may reimburse the seller for escrow payments.
- Alternatively, the buyer might set up their own escrow account to handle taxes and insurance directly.
Need more details on structuring this?

Yes

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In this setup, structuring taxes and insurance can work in these ways:
- Seller Escrow Account: The buyer reimburses the seller for amounts paid toward taxes and insurance.
- New Escrow Account: The buyer may set up their own escrow account to pay taxes and insurance directly.
- Direct Payment: The buyer pays these costs outside of escrow, ensuring deadlines are met.
Would you like to know how to draft these agreements?

Yes

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Drafting agreements for an owner carry deal usually involves these steps:
- Use a real estate attorney to draft the promissory note, purchase agreement, and deed of trust.
- Specify tax and insurance payment responsibilities in the agreement.
- Clearly outline the process for escrow payments or direct payments.
Do you want help finding a local real estate attorney?

No thanks

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It seems like you've gone through a detailed explanation of owner financing, wraparound mortgages, and related obligations. If you have any specific follow-up questions or need clarification, feel free to ask!

Owner Carry Real Estate Process

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