Seller financing, also known as a seller “carry back,” is when a property seller extends credit to a buyer to assist with the purchase. This approach can simplify transactions but requires compliance with various state and federal regulations. Here’s an overview of crucial points and common questions regarding seller financing.
Key Questions to Consider in Seller Financing
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Specific Disclosures:
- California law mandates specific disclosures for certain seller financing transactions. For instance, the Seller Financing Addendum and Disclosure (C.A.R. form SFA) is necessary for 1-4 unit residential properties when an arranger of credit is involved.
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Arranger of Credit:
- Typically, the buyer’s real estate agent acts as the arranger of credit. This role can be played by anyone who is not a party to the sale and who is involved
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