My question involves real estate located in the State of: Minnesota
I'm looking for legal advice regarding purchasing a home Contract for Deed.
I unfortunately went through a foreclosure in the past due to a major medical crisis (cancer). Therefore I am not eligible for a regular mortgage at this time. In my desire to move towards home ownership again, I sought out Contract for Deed financing. I have found a private investor that will finance my contract for deed, and we have agreed on fair terms. Up to this point things have gone smoothly, with the investor giving me full reign on choosing the home I'd like to purchase. I have now found said home, and the purchase is pending. The actual "buyer" is my investor, and once he closes on the home, we will turn right around and sign the contract for deed. I will then take possession of the home.
My investor is only slightly experienced with this whole process, having done this three other times in the past. Up until recently, my assumption was that like a regular purchase transaction, my downpayment was due at closing. Well, today I received an email from my investor saying that the downpayment was due when the inspection period on the home ended (at that point he can't back out of the purchase without losing his earnest money).
Besides making me a little leery, this doesn't seem correct to me. I don't feel comfortable paying the down payment until the signing of the contract for deed. Also, am I correct that he can't convey his interest in the property and even execute the contract for deed until he actually owns the property? I would be giving him my downpayment for a house that isn't even his to give yet (until he closes on it).
I honestly don't think he is trying to scam me. I think he is just trying to secure that I go through with my side of it, and I don't back out leaving him stuck buying a house that he doesn't need. If I am correct and that is the reason he is asking for the down payment now, I'm not entirely sure how to alleviate that. But I do not think the down payment up front is correct or safe for me to do.
Note: I will be hiring a lawyer to at least over the contract for deed documents and alert me to potential issues. I haven't gotten to that point yet, so I am turning to you experts for help with this situation.
Any advice would be greatly appreciated.