Can real property be repossesseddue to breach of a purchase agreement?
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Can real property be repossesseddue to breach of a purchase agreement?
Grandparents passed away, left farm in IA to my mother, aunts and uncles. One uncle farmed as a partnership with his other siblings for 13 years and the siblings were paid nothing. The siblings agreed to sell farm to uncle with a contract at a more-than-fair rate. Uncle was supposed to pay other siblings set amount of money each year for 10 years. All he ever paid was 1 interest only payment the second year of the contract, then no more. Contract date is now past. Farm is now worth much more, uncle is trying to sell part of farm now and pay small amount to siblings. Can he do this?
Asked on August 15, 2011 Iowa
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
In most real property transactions involving family owned assets, there is a written contract regarding the sale setting forth purchase price, close of escrow and other terms such as a loan with its terms, interest rate and amount of the loan, assuming a loan is needed.
Any loan concerning the sale of the property is typically secured by a recorded mortgage or trust deed on the property sold as security for the promissory note.
If your uncle has not honored the payments on the family farm, and assuming the promissory note is secured by a mortgage or trust deed, the beneficiary under the recorded mortgage or trust deed can serve and record a notice of default and start the foreclosure process.
If there is a recorded mortgage or trust deed on the property, it operates as a lien of record allowing its payment if the property is sold to a third party through an established escrow where the new buyer obtains a loan to make the purchase.
You should consult with a real estate attorney about your inquiry in person.
Good luck.
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