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If the seller is still obligated to a financial institution for the loan amount on the property in question,

It is important for both the buyer and seller to protect them selves and contact the financial institution associated with the loan to determine if they will accept and honor the contract entered into by both parties, through this, or any company that is acting as a liaison. If need be, get a copy of the contract and send it to them for their approval or denial before signing.

In some situations the bank may consider this a Straw Purchase, meaning

“A straw deal occurs when one individual puts a car, boat, RV, or such like vehicle, in his or her name but another person will be driving it and making the payments. Illegal in most jurisdictions and unwise on the part of the individual signing the contract.”

In such a case, the bank may make any attempt to collect property, or in the event, fees associated with late or missing payments, by all parties involved.

It is important that each party understand their obligations, but equally the ramifications that may take place, should payments not be received by the bank in a timely and efficient manner.

Make sure the financial institution is aware at all times of your intent, should you choose to enter into a contract such as this. Make clear your liabilities, and this goes for the buyer as well as the seller, and the potential recourse that may take place, should there be difficulties in the transaction. Have documented as well, the companies liability should they be the purpose of a default in such an agreement.

Beware by being aware!

Follow the advice given on prior postings, make sure you contact the Better Business Bureau or the Attorney Generals office in the jurisdiction of the company, and take into concideration the experience of other customers, before placing yourself under any obligation.

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