No. of Recommendations: 3
The Buyer has used the attorney for previous transactions. Thing is, it looks like I’d be paying the costs as the Seller which makes me think the attorney should simply represent the transaction as a whole...not the Buyer, not the Seller. Doesn’t Seller typically pay closing costs?

Closing costs are paid for by whoever the contract says they are paid for. Attorneys are generally paid by the side that hires them, since buyers and sellers often each have their own attorney. If they are a 3rd party attorney (maybe one who works for the lender, the title company or one of the real estate brokerages involved) then, even though the buyer or seller may be charged a fee for an attorney, the attorney is generally representing the 3rd party, not the buyer or seller.

I would ask you - if you think the attorney is supposed to be representing you, why did the attorney suggest that you go to your personal attorney with questions? If he were representing you, he would have told you to call him.

@aj485 -

“But what gains is the OP trying to protect? Getting paid in full for the second loan, the sooner the better, is the best protection of his/her gains.”


I think this was supposed to be @JAFO, but here goes:

The gains would be the 5% earned interest on the 145k seller financed loan over 5 years...approximately 25k in interest.

But you get the rest of the principal back and can invest it in something else for the remainder of the 5 years. If the buyer pays the $145k back at the end of 1 year, and you get all $25k in interest, your APR on the principal would be 17.2% vs. the 5% you say you are charging. If you want to ensure that you receive more interest, even if the buyer pays it off early, you should charge more interest at the beginning - say start out with 8% the first year, 6% the 2nd year, 4% the 3rd year, 2% the 4th year, and 1% the last year, and not charge him a pre-payment penalty, whenever he repays. If he takes the whole time to repay, you'll end up with about the same interest, so it will still be about the same 5% over the course of the loan. But if he pays it back early, then you'll have gotten a higher rate - but not the 17.2% - it will be something between 5% and 8%

The reason Buyer is getting 130k loan (they've already qualified) is to payoff my remaining mortgage on the condo; I currently owe ~130k. The Buyer doesn’t have 130k in cash. It would be great if I owned the unit outright and could do seller financing on the whole amount...simply not the case.

Presumably, it's been disclosed to the bank that you are carrying this huge 2nd, and he still qualified for the mortgage? Because if it hasn't been disclosed to the bank that the total LTV is >90%, that's mortgage fraud. And have you done any qualification on the buyer yourself, such as pulling credit reports?

AJ
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