Can I evict under a owner finance contract?

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Can I evict under a owner finance contract?

We have a single wide mobile home on half an acre in Robertsdale, Al. We signed a contract to owner finance and the couple was to pay a monthly amount for seven years, at which time, the loan to the mortgage company would be paid and they would take ownership. They regularly make the payment late and have failed to include late payments. The late payments to the mortgage company have resulted in higher interest charges, which will inevitably push back the payoff. They have now filed for Chapter 13 and wish to maintain the debt with us but I am afraid once the Ch 13 is approved, they will not pay and our hands will be tied.

Asked on October 2, 2019 under Real Estate Law, Alabama

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

1) At present, not having taken ownership, they are still your tenants; tenants may be evicted if they violate the terms of the agreement under which they are renting. That said, while you have a right to evict under an owner-finance or rent-to-own agreement, so long as they do not have title yet, it is always more complex to evict in such a situation and you are strongly advised to retain a landlord-tenant attorney to help you.
2) Bankrutpcy ("B/R") will not prevent eviction, but will delay it; while B/R is a complex topic and so to oversimplify, B/R courts will not let someone live rent free after filing B/R unless they keep up with the rent, so at a minimum, they will have to pay the amounts on time on a forward-looking or future basis to stay in possession. It's also not uncommon for the B/R court to allow eviction for past due amounts after the automatic stay (or halt on legal actions) has ended, though typically then, all you can do is evict--the B/R will impact your ability to actually collect the past due money. And you will not have to sell to them if they fail to pay the full purchase price. But if B/R does result, because it is complex and adds a number of rules with which you'd have to comply, that's another reason to retain an attorney to help you.


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