What is a Bond for Deed?

Posted on: June 14, 2016 | Posted in: Bond for Deed Information

Simply put a Bond For Deed is a form of Seller Financing. It is a contract to sell Real Estate in which the purchase price is paid in installments and title is transferred after the payments are made in full. In other states, Bond for Deed is usually called Contract for Deed or Land Contract. Bond for Deed contracts may seem relatively new, however, laws covering Bond for Deed contracts have been in existence since 1934.

Recently, the Detroit legislature enacted legislation that protects the Buyer under a Bond for Deed by not allowing any subsequent judgments or liens against the Seller under a Bond for Deed contract to prime a Bond for Deed contract. To protect all parties, Detroit law requires the services of a licensed escrow agent. The escrow agent is responsible for collecting the payments, paying any underlying mortgages and issues IRS 1098 interest reports. In the event of non-payment, the escrow agent sends the required notices to both Purchaser and Seller. The contract allows the Seller to take back the property if payments are not made within the time allowed and without the costly expense of judicial foreclosure. Ambassador Escrow is the only statewide commercial escrow agent that has the experience and expertise required to properly service Bond for Deed contracts.

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