Owner Finance Contract

Owner financing can seem confusing, but the process is essentially the same as any other real estate sale or purchase. It follows the same closing and escrow process as a traditional property sale, with the only difference being who finances the deal – the owner, instead of a bank. That’s why an owner finance contract should not only cover the standard terms for buying or selling a property but also include the specifics of the owner financing arrangement.

Typically, you'll start with a real estate purchase agreement containing the standard sections for a property sale or purchase. In owner financing transactions, there is also usually a separate addendum that covers the details of the owner financing terms. Below are some of the key terms you'll find in an owner finance contract:

Parties Involved

The buyer and seller (the parties to the agreement) need to be clearly defined in the owner finance contract.

Effective Date

The owner finance contract should specify the date it becomes effective.

Property Information

The property details must be listed to ensure the owner financing contract covers the correct property in the transaction.

Purchase Price

The total price to be paid for the property must be documented in the owner financing contract.

Financing Type

This section should indicate the type of financing used for the purchase (owner financing, cash purchase, traditional financing, etc.).

Owner Finance Loan Terms

The specific terms of the owner financing agreement, including the loan term, amount, interest rate, and payment schedule, should be outlined.

Prepayment

The owner finance agreement should specify whether early payment or payoff is allowed and any associated terms or restrictions.

Property Taxes & Insurance

It must be clear who is responsible for paying property taxes and insurance, and whether these will be escrowed.

Earnest Money Deposit

If an initial deposit is required, the owner finance contract should indicate the amount and whether it is refundable under certain conditions.

Inspection Period

Specify whether the buyer has an inspection period and what happens if issues are found during the inspection.

Escrow Agent

Identify the title and escrow agent who will handle the closing process during the property sale or purchase.

Closing Fees

Clarify who is responsible for paying the closing fees (buyer, seller, or both).

Closing Date

The owner finance contract should state when the closing must occur by.

Assignment Rights

Specify whether the buyer or seller can assign the agreement to another party (common in wholesale transactions).

Representations and Warranties

These sections typically detail the assurances made by both parties regarding the property and the transaction.

Dispute Resolution

Outline how disputes will be resolved (arbitration, mediation, or legal proceedings) and where these would take place.

This is not an exhaustive list of all the terms that should be in an owner finance contract and both the buyer and seller should carefully review all sections, customize them to fit their specific arrangement, and seek advice from legal and financial professionals before finalizing an owner finance agreement. Proper documentation of the terms for the property sale and financing ensures that both parties are in agreement before sending to the title and escrow company to complete the transaction.

We offer a downloadable owner finance contract to help you structure your owner financed deal. We’ve created two versions of the owner finance contract template – one is designed for the seller of the property and the other is for the buyer of the property. That way you’ll have a document that is tailored to your position in the owner financed real estate transaction.

Why is it not a free owner finance contract template? That’s because we’ve spent countless hours creating our owner finance contract and it will help you reduce the cost of preparing an owner finance agreement and close your deal quickly.

Owner Finance Contract Template

If you’re ready or preparing to buy or sell a property with owner financing, you’ll want to pick up our owner finance contract template. This ensures you have the proper owner financing documents to secure your deal. We’ve created an owner financing contract in both a Seller’s version and a Buyer’s version. Choose the version that aligns with your role in the transaction – if you’re selling the property, get the Seller’s version; if you’re buying, get the Buyer’s version. The template is an editable download which allows you to customize it to your specific owner financing needs.

Our owner finance contract is designed to simplify the process of structuring your seller financed real estate deal. This owner finance contract provides the necessary documentation to either sell or purchase a property through owner financing. It includes both our real estate purchase and sale agreement along with our owner financing addendum so you have the owner finance agreements to finalize your transaction. Here's a quick highlight of what's included in our owner finance contract package:

Real Estate Purchase & Sale Agreement (PSA)

Overview: This real estate document serves as the primary agreement between the buyer and seller in a real estate purchase or sale process. It is the first document in our owner finance contract template package.

Purpose: It outlines the property details, purchase and sale terms, specific conditions agreed upon by both parties, and the different financing arrangements, among other important elements of a property sale.

Uses: Applicable for both residential and commercial real estate transactions. Additional addendums, such as an owner finance addendum, can be attached depending on the specifics of the deal.

Content: The real estate PSA includes all the key terms and sections typically found in standard real estate agreements.

Customizable: The agreement can then be tailored to reflect the specific terms and needs of both the buyer and seller.

Owner Financing Addendum

Overview: This owner financing agreement details the owner financing terms between an owner and buyer. It is the second document in our owner finance contract template package and is attached to the PSA.

Purpose: It outlines important owner financing terms and sale specifics for the buyer and seller. The escrow and title company often use these terms to create the final promissory note.

Uses: Designed for owner financing arrangements where the seller owns the property outright or will pay off any underlying mortgages at closing. Not intended for "Subject To" sales, where the existing mortgage remains in place after the transaction.

Content: The owner financing agreement includes all key terms and sections commonly found in standard owner financing agreements.

Customizable: The addendum can be edited to reflect the specific terms and needs of both the buyer and seller.

Note that while these are the two main documents needed for an owner financed real estate transaction, it's important to always conduct thorough due diligence and consult with a local legal professional before finalizing any agreement with another party.

An owner finance contract is needed for anyone involved in a real estate transaction that includes owner financing. Whether you're a homeowner looking to sell your property without traditional bank financing or a buyer seeking flexible terms, an owner finance contract is designed to protect both parties and outline all necessary details of the owner finance agreement.

Real estate investors, homeowners, and buyers alike can benefit from a customizable and ready-to-use owner finance document like our owner finance contract.

 Download Our Owner Finance Contract Template Today

 If you only need the Real Estate Purchase Agreement (PSA), the Owner Finance Addendum, or another specific owner finance contract template or tool for your transaction, you can browse our full collection of owner finance templates and tools. Whether you're looking for a single owner finance document or an owner finance analysis tool, we have the tools you need to structure your owner financed deal with confidence.

 See Our Owner Financing Templates & Tools

 If you're looking to sell your property and want to explore owner financing options, our Owner Finance Team can place a direct offer on your property. We specialize in purchasing properties with owner financing and would be interested in your property.