Are you a real estate owner that plans on selling properties in your portfolio? If you are, you should know that there are many different ways in which you can sell your property to a buyer.

In this article, we will review a few different deal structures that a Seller can use to their benefit when selling real estate in Oklahoma.

Your Oklahoma real estate lawyer can assist you when it comes time to sell

Every buy-and-hold investor eventually reaches a point where they no longer want to hold. Instead, they are now ready to sell.

This happens to all long-term investors. Sometimes it could be after five or so years, because they received enough appreciation that they can sell, capture the profit, and re-invest into an even larger property. This is one of the more common strategies played.

Some investors just reach that point where they’ve held the property long enough that they are just ready to move on or retire.

In either of these scenarios, there are several strategies.

For the investor looking to move up and immediately re-direct their proceeds, they would be well served to consult with an attorney or tax professional about a 1031 exchange.

For the investor looking to exit real estate altogether, they might want to consider being a financier. This could involve a variety of selling financing options, like holding mortgages or utilizing contract-for-deed arrangements.

Different types of seller-financing in Oklahoma

There are different ways that you can sell your property in Oklahoma, depending on your overall objective.

If you just want cash, then you will market and advertise your property as “cash sale only.”

You may want to allow your buyer to get bank financing, or to borrow the money to be able to purchase your property. But understand that you are in control as to whether you will allow the contract to be contingent on financing approval. What this means is that if a buyer makes an offer, you are in control as to whether you will accept that offer contingent on the buyer’s ability to obtain financing.

Alternatively, you may be willing to finance the purchase. This would mean that you would allow the buyer to make payments over a term of years to pay off the contract purchase price. Now how you structure this is up to you, as there are multiple ways.

However, if you are a new real estate investor, or a new landlord, you don’t need to live through decades of trial and error. By connecting with an experienced real estate attorney from the start, you can save many thousands of dollars by using contracts and leases that have been optimized for your benefit.

Selling your property and retaining a mortgage in Oklahoma

The most basic way is to execute a sales contract on your property for a definite price, and closing term. In this type of contract, you will be entitled to the full purchase price on the day of closing. The buyer will either bring a cashiers check for the full amount, or they will borrow the money from a bank, and bring a cashiers check from the bank that is financing the purchase.

But you can play the role of the bank, and collect the interest, origination fees, that a bank would ordinarily charge to a borrower.

In this case, we will draft a contract for a definite price and closing date. Then we will have a separate contract, termed a promissory note, that defines how much you are loaning the buyer. It may be all of the purchase price or only part of it, depending on whether you require the buyer to bring a down payment to closing.

After executing the contract and promissory note, you will have the buyer execute a mortgage. This mortgage is a security interest, the same as a lien, that you will file in the county records that will attach to this property. You will simultaneously execute the deed to the new owner, the buyer, at the same time that you will execute and file the mortgage that will attach to the deeded property.

In the event that the buyer defaults on his or her payments to you, you can foreclose on your mortgage to seize the property back, to satisfy the outstanding balance due to you on the note.

You can sell your property using a “contract for deed” or “rent to own contract”

Another way of selling your property, with seller-financing, is to utilize a contract-for-deed arrangement, which is similar to a rent-to-own contract.

In a contract-for-deed, you set a definitive price for the purchase of the property, and a closing for the exchange of possession. However, you do not actually convey the deed until the full purchase price has been paid off. You can put interest in the contract, and you and the buyer can negotiate the term for as many years as you both agree.

While you do retain legal title in your name, you have still conveyed equitable title to the buyer, and the buyer does have an equitable ownership-interest in the property. Therefore, you cannot simply evict the buyer if they default on payments. Instead, you have to initiate an “ejectment” lawsuit, which is basically the same process of a foreclosure lawsuit in Oklahoma.

Further, Oklahoma has specific statutes that require you to file contract-for-deed with the county records, and pay mortgage tax on it, prior to initiating any type of lawsuit against the buyer.

Therefore, the contract-for-deed does not necessarily protect your rights, or increase efficiency, anymore that conveying a deed with a mortgage attached to it.

Similarly, contracts that are titled “Rent to Own” agreements can also be treated like contract-for-deeds when it comes time to go to court. It all depends on how the contract was structured. A lease with an option to purchase that requires a lump sum payment accompanied by written demand to exercise the option is more likely to be treated like a lease when it comes time to evict. However, a contract that states that the rental payments are applied to a purchase price will likely be treated under the same laws as a contract-for-deed.

Diving into the specifics is beyond what is possible in this article, which is why you should call our office to schedule a consultation if you have questions about foreclosing or evicting a buyer/tenant under a contract for deed or lease to own agreement.

Contact our Oklahoma City Real Estate Attorney to help you sell your property

When it comes time to sell your property, or your entire portfolio, you may call on us for help. Travis Charles Smith is an experienced real estate attorney and real estate investor that can advise you on a variety of ways to structure your deal. You have options. And you should consider all of your options.

To schedule your consultation, call (405) 724-8112 or send us an email.