Bond for Deed, Louisiana

By
Real Estate Agent with Gardner Realtors, Licensed in La.
http://actvra.in/nvF

In Louisiana Bond for Deed is where the buyer makes a down payment but does not take title to the property. It is often a way to owner finance where the buyers has a note to the seller. If the buyer defaults, he loses all. His downpayment and whatever he has paid on the property. The note is paid to an intermediate step who pays the mortgage if the seller has one.When things get tough its a way to sell. The buyer takes the chance that he can pay the note. In practical terms the buyer generally refinances and pays off the seller. It rarely hangs around for more than 10 years. Its a great tool to use for flooded homes where the buyewr has a hard time gettig a loan and the seller has a hard time selling otherwise. I am not sure this exists in other states? 

                                     

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Rainmaker
166,386
Linda Davis
RE/MAX Realty Group - Gales Ferry, CT

Ann,

Similiar to CT.  I believe it is the mortgage waranty deed that precludes it here.

November 26, 2006 06:48 PM #3
Rainer
126,988
Stefan Scholl
Buyer's Broker of Northern Michigan, LLC - Petoskey, MI
Northern Michigan Real Estate

Eric, in Michigan it is called a land contract.  The seller (land contract vendor) retains legal title until the contract is paid off, while the buyer (land contract vendee) obtains equitable title.  Although technically a land contract sale could trigger a due on sale clause if the property is already subject to a mortgage, I have never heard of a bank exercising this option absent some other special circumstances (such as the seller not making payments). 

November 26, 2006 09:03 PM #4
Rainer
111,189
Carole Cohen
Howard Hanna Cleveland City Office - Cleveland, OH
Realtor, ePRO
Yes Eric, ditto to what Stefan said here in Ohio. This reminds me why real estate is local. There was a conversation on a list serv that went on for quite some time about why not just have us all licensed nationally and then for example, I can sell a home in your neighborhood without an issue.  Ha! Obviously each State has it's own reasons for quirky laws (for lack of a better term) and I would be unprepared to read up on 50 license laws. Ok, my rant for the evening. Thank you though I found this really interesting!
November 26, 2006 09:33 PM #5
Anonymous
Anonymous
Anonymous

I have my house listed in Louisiana.  My Realtor has told me there is a buyer that wants to bring a contract with Bond for Deed.  How is the commission paid with that scenario?  If the buyer is only paying for a certain period and then it closes is it paid then. Doesn't the Realtor want some money until it closes?  S

June 28, 2008 01:50 PM #6
Anonymous
Anonymous
Dean

Bond for Deed scares me a bit.  It's too waited on the sellers side with the seller getting the asking price with no negotiation, the seller getting the interest rate they desire, the seller holding the title, and contacts that are not standard but drawn up as that the seller sees fit. 

If you can get a guaranteed loan in 12 to 24 months to pay off the seller and receive the title, now that's different, but if you were turned down before, what makes you think you will get approved then? The seller most likely won't send good credit reports for you because you made your payments on time. After all, the seller is not Visa or Mastercard.

You put a large lump sum as a down payment, you add costly improvements, you make your payments monthly for say 60 months, and then you lose your job because of illness, miss a payment, and lose everything!  This Louisiana law sounds like a new "predatory leader" type of thing waiting to happen.

July 20, 2008 06:26 AM #7
Rainmaker
398,537
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs

It can be great for the seller as his note gets paid and he gets enough of a downpayment to protect his investment. The buyer runs the risk of getting nothing in the end.  This saved a lot of people during the oil bust of the 1980s. When this came into being as it was hard to get get a loan with less than 20% down.

You make some very valid points. It seems to be in the sellers favor but he is just trying to get his note covered. In the most part it worked.

July 20, 2008 08:56 AM #8
Anonymous
Anonymous
Lola

Do you have to check with your mortage company first to do a bond for deed?

August 05, 2008 11:52 AM #9
Anonymous
Anonymous
geORGE SILVA

i have a bond for deed in new orleans. I owe the 38000 on it and the seller is getting anxious and wants it off her name. Can i get a loan to pay it off if i approach the bank with this scenario. In other words, using that home as collateral? its worth 135000.

July 25, 2009 04:39 PM #10
Rainmaker
398,537
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs

Sure, you can pay it off and get a loan from any bank that you wish. If its a primary home or second home you should get the best deal possible. Its really up to you and it the interest rate is in your favor.

You may be able to negociate the seller down from 38,000 just to get her clear. This of course is up to you. You may use these concessions to pay for any cost you have with the new loan. 

July 25, 2009 04:45 PM #11
Anonymous
Anonymous
Kelly

Whats the best way to locate a bond for deed situation in NOLA, and how does one get it started???

October 23, 2009 06:23 PM #12
Anonymous
Anonymous
Crystal

If my father-in-law puts his name on me and my husband's house here in LA will the mortgage go into his estate? Meaning he buys the house we do a bond for deed and he passes will the mortage be included in his estate? Please help! We are trying to buy a home here in the near future.

November 18, 2009 02:41 PM #13
Rainmaker
398,537
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs

Crystal, I am not an attorney so I would only be guessing that it would. This could however be written into the bond for deed. Better check with an attorney who is familiar with real estate.

November 18, 2009 02:50 PM #14
Anonymous
Anonymous
Anonymous

couldn't you do a wraparound mortgage in place of bond for deed.  seems like a little more protection for the buyer.

April 20, 2010 07:55 PM #15
Ambassador
1,860,709
Judi K Barrett
Judi Barrett~Integrity Real Estate Services~Idabel, Oklahoma - Idabel, OK
Broker/Owner, Integrity Real Estate Services -IDAB

It's a contract for deed in Oklahoma. 

June 18, 2010 07:46 AM #16
Anonymous
Anonymous
A mess
Can you sue a person that breeches the bond for deed contract.
December 31, 2010 07:58 PM #17
Rainmaker
398,537
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs

Sure, but you get the house back and you keep the downpayment and whatever the purchaser has paid you. They get nothing if they default....Usually that is enough.

December 31, 2010 09:12 PM #18
Anonymous
Anonymous
A mess

I am in a bond for deed (seller) and the house got cout on fire (80% lose) the buyer had insurance. The house must be torn down. I did not want to rebuild. I reqested that the morgage note be paid from the insurance. The buyer was already in default but our contract was not cancelled in writing. My question: is  the buyer responsable for the tare down of the home or am I, and since the buyer paid for the morgage note  with the insurance does the property belong to them.

January 01, 2011 02:02 PM #19
Anonymous
Anonymous
Stressed Out

Here's a situation... Two couples enter into a Bond for Deed as purchasers (all four names are listed as purchasers). One couple has changed their minds and no longer want the property and they want their name off the Bond for Deed. The other couple wants to keep the property and are willing to pay the full amount of the notes and assume full financial responsibility. Can this be done and how? 

July 12, 2011 04:53 PM #20
Anonymous
Anonymous
Lafayette

any thoughts on buying property using the "Subject To" method and /or wrapping the sell side using bond for deed?

 

November 05, 2013 01:52 PM #21
Anonymous
Anonymous
Danae Waggoner

Our bond fo deed home burnt down and we paid the mortgager for homeowners insurance but he refused our money back for deposit or payments made claiming it was only insured for 2/3 the value so he's taking a loss here too. Doesnt seem right. Any thoughts or advice? I spoke with an attorney and his advice was to cut my losses. Attorneys are looking for big money these days

June 10, 2014 09:47 AM #22
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Rainmaker
398,537

Eric Bouler

Listening to your Needs
Do not be afraid to Ask Eric about New Orleans Real Estate...
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