Seller financing of land

[LeethalDose]

Thinking of selling some land as "seller financed".

Will the buyer have to pay off the land before a bank will loan money to build? I cannot imagine that banks would loan to build on property "under lien".

If banks do loan that way, what happens if the buyer defaults on either or both loans - I don't want to be stuck with land that has a home on it owned by someone else or a bank...

[mugofbeer]

If you are the lender then your loan contract is with one party and one party only. If the buyer defaults then the land reverts back to your ownership. The one thing you would have to monitor is that the buyer didn't get a 2nd on the property without your knowledge and approval. Any 2nd mortgage lender should get the approval of the 1st lien holder but you never know.

Now if I understand that you would be the seller of the land ONLY and the buyer is to build a house on the property then you should seek legal advice. Personally, I would be very hesitant to do that because of the situation you may be describing. That brings up the thought, if the buyer can't affoard to buy the land outright or isn't in good enough financial condition to buy the land and have a house built in one single loan, it tells me the buyer is pretty risky.

[LeethalDose]

That brings up the thought,...it tells me the buyer is pretty risky.

Good point - trying to think of a win-win way to help someone who probably *shouldn't* be helped. Thanks for the thoughts...