How To Find and Finance a Farm
(Page 6 of 8)
LAND CONTRACTS should be considered when there is little
money for a down payment but funds may be available in the
future for larger payments. Through a standard land
contract agreement one can arrange an installment purchase.
The seller may obtain the balance of the sale price over
the existing mortgage by pledging his own credit for a loan
with the land contract as security. The buyer assumes the
existing mortgage payment plus payments due under the
seller's loan. The seller retains title and is covered in
case of default by the buyer. Seller may also stipulate
that all installment payments may be liquidated if the
buyer defaults. In this manner, land contracts are
encouraged without the risk of complicated foreclosure
proceedings following default. The FHA does not insure
installment sales but will continue to insure any existing
FHA mortgage even though an installment purchase has been
made. Once the buyer is able to refinance the total debt
with an outside mortgage, he obtains title from the seller.
RELATED CONTENT
A TRADE-IN or a swap may be arranged if you already have
property. Such arrangements are common and can be
beneficial to all parties, especially during periods of
tight money. On occasion, you may find a farm widow or
widower who wants to move to the suburbs or the city. Any
difference in costs can be managed by a second mortgage
payment.
Alternatives to individual ownership ought to be considered
if resources and credit are limited. Several individuals
may join together to purchase land that they couldn't
obtain otherwise. Several joint arrangements may be
considered:
JOINT TENANCY: Two or more individuals have the same
ownership interest in a single parcel. In a joint tenancy
agreement each owns all, with the right of survivorship.
This arrangement seems best for tribes or communes,
especially when one individual pays more than his share in
costs, in which case he may take a full deduction on taxes.
TENANCY IN COMMON: Two or more individuals each with the
same right to possession and benefits according to his
share of ownership. There are no rights of survivorship. A
tax liability arises when one tenant pays more than his
share of costs.
Although PARTNERSHIPS are the most common form of
unincorporated arrangement and offer certain business
advantages, they are least desirable as an alternative to
purchasing a hip farmstead. Various tax factors and other
considerations affect the partnership to creat a good
possibility for future hassles between partners. The
Treasury Department carefully scrutinizes partnerships to
insure that they are not set up as corporations.
Page:
<< Previous 1 |
2 |
3 |
4 |
5 | 6 |
7 |
8 |
Next >>
