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The Utah Seller Financing Addendum is an essential document that supplements a Real Estate Purchase Contract (REPC) when the seller agrees to finance the buyer's purchase of a property. This addendum outlines critical details such as the credit documents involved, which may include a note and deed of trust or an all-inclusive deed of trust. It specifies the credit terms, including the principal amount, interest rate, payment schedule, and any balloon payments. Responsibilities for property taxes, homeowners association dues, and hazard insurance premiums are clearly defined, ensuring both parties understand their obligations. Payment methods are also addressed, allowing for direct payments to the seller or through an escrow agent. The addendum includes provisions for late payments and prepayments, as well as a due-on-sale clause that protects the seller's interests. Additionally, it requires the buyer to provide financial disclosures and a credit report for the seller's review, ensuring transparency in the financing process. This document serves as a comprehensive guide for both buyers and sellers, clarifying their rights and responsibilities in the seller financing arrangement.

File Information

Fact Name Fact Detail
Purpose The Seller Financing Addendum is used to outline the terms of financing provided by the seller to the buyer in a real estate transaction.
Incorporation This addendum becomes part of the Real Estate Purchase Contract (REPC) once agreed upon by both parties.
Credit Documents The seller's credit extension is documented through a Note and Deed of Trust or an All-Inclusive Deed of Trust.
Tax Responsibilities The buyer is responsible for property taxes, homeowners association dues, special assessments, and hazard insurance premiums.
Payment Structure Payments can be made directly to the seller or an escrow agent, as agreed upon in the addendum.
Late Payment Terms Payments made late may incur a charge, either a fixed amount or a percentage of the installment due.
Due-On-Sale Clause This addendum includes a due-on-sale clause, allowing the seller to call the loan due if the property is sold.
Buyer Disclosures The buyer must provide financial information and may need to share IRS returns for verification.
Governing Laws This addendum is governed by Utah law, specifically the regulations set forth by the Utah Real Estate Commission.

Documents used along the form

The Utah Seller Financing Addendum is an important document that outlines the terms of seller financing in a real estate transaction. In addition to this addendum, there are several other forms and documents that are commonly used to facilitate the sale and ensure that all parties are informed and protected. Below is a list of these documents, along with brief descriptions of each.

  • Real Estate Purchase Contract (REPC): This is the main agreement between the buyer and seller that outlines the terms of the sale, including price, closing date, and property details.
  • Buyer Financial Information Sheet: This document provides the seller with information about the buyer's financial status, helping the seller assess the buyer's ability to fulfill the financing terms.
  • Credit Report Authorization: A form allowing the seller to obtain the buyer's credit report, which is used to evaluate the buyer's creditworthiness and financial stability.
  • Title Insurance Policy: This policy protects the buyer and lender against any claims or disputes regarding the property title, ensuring that the seller has the right to sell the property.
  • Tractor Bill of Sale Form: To facilitate the legal processing of tractor sales, utilize the essential Tractor Bill of Sale documentation to ensure all requirements are met.
  • Property Disclosure Statement: A document where the seller discloses known issues or defects related to the property, providing transparency to the buyer.
  • Escrow Agreement: This agreement outlines the terms under which an escrow agent will hold funds and documents until the transaction is complete, ensuring a secure process for both parties.
  • Amortization Schedule: A table detailing the payment schedule for the loan, showing how much of each payment goes toward principal and interest over time.
  • Settlement Statement (HUD-1): This document provides a detailed account of all costs and fees associated with the closing of the real estate transaction, ensuring both parties understand the financial aspects involved.

These forms and documents work together to create a comprehensive framework for real estate transactions involving seller financing. Each document plays a specific role in ensuring that both the buyer and seller are informed and protected throughout the process.

Common mistakes

Filling out the Utah Seller Financing Addendum form requires attention to detail. One common mistake is failing to accurately complete the credit terms. Buyers often overlook specifying the principal amount, interest rate, and payment schedule. These details are crucial as they determine the financial obligations of the buyer. Incomplete or incorrect entries can lead to confusion and disputes later.

Another frequent error involves the selection of payment recipients. Buyers may neglect to indicate whether payments will be made to the Seller or an Escrow Agent. This choice impacts how funds are managed and distributed. If this section is left blank or filled out incorrectly, it could complicate the payment process.

Additionally, individuals often misinterpret the late payment and prepayment terms. Buyers might not specify the late charge amount or the interest rate for defaulted payments. Such omissions can lead to misunderstandings about penalties and the consequences of missed payments, potentially resulting in financial strain.

Another common mistake is in the due-on-sale clause. Buyers sometimes fail to acknowledge this clause's implications, which can lead to unexpected responsibilities. Understanding that the underlying mortgage may become due if the property is sold is essential for both parties involved.

Buyers may also forget to provide the necessary financial disclosures. The addendum requires a Buyer Financial Information Sheet, and neglecting to include this can delay the process. This information is vital for the seller to assess the buyer's creditworthiness and financial stability.

Moreover, inaccuracies in the title insurance section are common. Buyers might either fail to check the appropriate box regarding the provision of a lender's policy or misunderstand who is responsible for paying for it. This oversight can create complications during the settlement process.

Finally, a significant mistake is not adhering to the acceptance deadline. Buyers or sellers may forget to specify or miss the time and date by which the addendum must be accepted. If this deadline is not met, the offer may lapse, leading to potential loss of the transaction.

Document Preview Example

SELLER FINANCING ADDENDUM

TO

REAL ESTATE PURCHASE CONTRACT

THIS SELLER FINANCING ADDENDUM is made a part of that REAL ESTATE PURCHASE CONTRACT (the "REPC") with

an Offer Reference Date of

 

 

between

 

as Buyer, and

 

 

as Seller, regarding the Property located at

 

.

 

 

 

 

 

The terms of this ADDENDUM are hereby incorporated as part of the REPC.

 

 

1.CREDIT DOCUMENTS. Seller's extension of credit to Buyer shall be evidenced by: [ ] Note and Deed of Trust [ ] Note and All-Inclusive Deed of Trust [ ] Other:

2.CREDIT TERMS. The terms of the credit documents referred to in Section 1 above are as follows:

$

 

 

principal amount of the note (the "Note"); interest at

 

% per annum; payable at approximately $

 

 

 

 

 

 

 

 

 

 

 

 

per

 

 

 

. The entire unpaid balance of principal plus accrued interest is due in

 

months from date of the Note. First

payment due

 

 

 

. Additional principal payments, balloon payments or other terms as follows:

The credit documents referenced in Section 1 of this ADDENDUM will contain a due-on-sale clause in favor of Seller. Seller agrees to provide to Buyer at Settlement: (a) an amortization schedule based on the above terms; (b) a written disclosure of the total interest Buyer will pay to maturity of the Note; and (c) the annual percentage rate on the Note based on loan closing costs.

3.TAXES AND ASSESSMENTS. Buyer shall also be responsible for: (a) property taxes; (b) homeowners association dues; (c) special assessments; and (d) hazard insurance premiums on the Property. These specific obligations will be paid: [ ] directly to Seller/Escrow Agent on a monthly basis [ ] directly to the applicable county treasurer, association, and insurance company as required by those entities.

4.PAYMENT. Buyer's payments under Sections 2 above will be made to: [ ] Seller [ ] an Escrow Agent. If an Escrow Agent,

will act as Escrow Agent and will be responsible for disbursing payments on any underlying mortgage or deed of trust (the "underlying mortgage") and to the Seller. Cost of setting up the escrow account shall be paid by:

[ ] Buyer [ ] Seller [ ] split evenly between the parties.

5. LATE PAYMENT/PREPAYMENT. Any payment not made within

 

days after it is due is subject to a late charge of

$

 

or

 

% of the installment due, whichever is greater. Amounts in default shall bear interest at a rate of

%per annum. All or part of the principal balance on the Note may be paid prior to maturity without penalty.

6.DUE-ON-SALE. As part of the Seller Disclosures referenced in Section 7 of the REPC, Seller shall provide to Buyer a copy of the underlying mortgage, the note secured thereby, and the amortization schedule. Buyer's obligation to purchase under this Contract is conditioned upon Buyer's approval of the content of those documents, in accordance with Section 8 of the REPC. If the holder of the underlying mortgage calls the loan due as a result of this transaction, Buyer agrees to discharge the underlying loan as required by the mortgage lender. In such event, Seller's remaining equity shall be paid as provided in the credit documents.

7.BUYER DISCLOSURES. Buyer has provided to Seller, as a required part of this ADDENDUM, the attached Buyer Financial Information Sheet. Buyer may use the Buyer Financial Information Sheet approved by the Real Estate Commission and the Attorney General's Office, or may provide comparable written information in a different format, together with such additional information as Seller may reasonably require. Buyer [ ] WILL [ ] WILL NOT provide Seller with copies of IRS returns for the two preceding tax years. Buyer acknowledges that Seller may contact Buyer's current employer for verification of employment as represented by Buyer in the Buyer Financial Information Sheet.

8.SELLER APPROVAL. By the Seller Disclosure Deadline referenced in Section 24(a) of the REPC, Buyer shall provide to Seller, at Buyer's expense, a current credit report on Buyer from a consumer credit reporting agency. Seller may use the credit report and the information referenced in Section 7 of this Addendum ("Buyer Disclosures") to review and evaluate the credit worthiness of Buyer ("Seller's Review").

Page 1 of 2

Buyer's Initials ________ Date ____________ Seller's Initials ________ Date ____________

8.1Seller Review. If Seller determines, in Seller's sole discretion, that the results of the Seller's Review are unacceptable, Seller may either: (a) no later than the Due Diligence Deadline referenced in Section 24(b) of the REPC, cancel the REPC by providing written notice to Buyer, whereupon the Earnest Money Deposit shall be released to Buyer without the requirement of further written authorization from Seller; or (b) no later than the Due Diligence Deadline referenced in Section 24(b), resolve in writing with Buyer any objections Seller has arising from Seller's Review.

8.2Failure to Cancel or Resolve Objections. If Seller fails to cancel the REPC or resolve in writing any objections Seller has arising from Seller's Review, as provided in Section 8.1 of this ADDENDUM, Seller shall be deemed to have waived the Seller's Review.

9.TITLE INSURANCE. Buyer [ ] SHALL [ ] SHALL NOT provide to Seller a lender's policy of title insurance in the amount of the indebtedness to the Seller, and shall pay for such policy at Settlement.

10.DISCLOSURE OF TAX IDENTIFICATION NUMBERS. By no later than Settlement, Buyer and Seller shall disclose to each other their respective Social Security Numbers or other applicable tax identification numbers so that they may comply with federal laws on reporting mortgage interest in filings with the Internal Revenue Service.

To the extent the terms of this ADDENDUM modify or conflict with any provisions of the REPC, including all prior addenda and counteroffers, these terms shall control. All other terms of the REPC, including all prior addenda and counteroffers, not modified

by this ADDENDUM shall remain the same. [

] Seller

[ ] Buyer shall have until

 

:

 

[ ] AM [ ] PM Mountain Time

on

 

 

(Date), to accept the terms of this SELLER FINANCING ADDENDUM in accordance with Section 23 of

the REPC. Unless so accepted, the offer as set forth in this SELLER FINANCING ADDENDUM shall lapse.

 

 

 

 

 

 

 

 

 

 

[ ] Buyer [

] Seller Signature

(Date)

(Time)

 

 

 

Social Security Number

[ ] Buyer [ ] Seller Signature

(Date)

(Time)

Social Security Number

ACCEPTANCE/COUNTEROFFER/REJECTION

CHECK ONE:

[ ] ACCEPTANCE: [ ] Seller [ ] Buyer hereby accepts the these terms.

[] COUNTEROFFER: [ ] Seller [ ] Buyer presents as a counteroffer the terms set forth on the attached ADDENDUM NO.

[] REJECTION: [ ] Seller [ ] Buyer rejects the foregoing SELLER FINANCING ADDENDUM.

(Signature)

(Date)

(Time) (Signature)

(Date)

(Time)

THIS FORM APPROVED BY THE UTAH REAL ESTATE COMMISSION AND THE OFFICE OF THE UTAH ATTORNEY GENERAL, EFFECTIVE AUGUST 27, 2008. AS OF

JANUARY 1, 2009, IT WILL REPLACE AND SUPERCEDE THE PREVIOUSLY APPROVED VERSION OF THIS FORM.

Page 2 of 2

Buyer's Initials ________ Date ____________ Seller's Initials ________ Date ____________

Similar forms

The Utah Seller Financing Addendum form shares similarities with several other documents commonly used in real estate transactions. Each document serves a specific purpose in facilitating the sale and financing of property. Below are four documents that are similar to the Seller Financing Addendum:

  • Real Estate Purchase Contract (REPC): This is the primary agreement between the buyer and seller outlining the terms of the sale. The Seller Financing Addendum is an extension of this contract, detailing specific financing terms that are incorporated into the REPC.
  • Note and Deed of Trust: This document serves as a legal agreement where the buyer promises to repay the loan amount to the seller. The Seller Financing Addendum specifies that the seller will provide a note, which outlines the terms of repayment, including interest rates and payment schedules.
  • Non-disclosure Agreement (NDA): This legal document is essential for protecting sensitive information in transactions. It is crucial for maintaining confidentiality, much like the Missouri PDF Forms that facilitate the creation of such agreements.
  • Loan Estimate: This document provides a summary of the key loan terms and estimated closing costs. Similar to the Seller Financing Addendum, it includes details about interest rates and payment schedules, helping buyers understand the financial implications of their purchase.
  • Closing Disclosure: This document outlines the final terms of the loan, including the total costs associated with the mortgage. Like the Seller Financing Addendum, it ensures that both parties are aware of the financial obligations and any fees involved in the transaction.

Key takeaways

Understanding the Utah Seller Financing Addendum is essential for both buyers and sellers involved in real estate transactions. Here are some key takeaways to keep in mind:

  • Credit Documentation: The addendum requires specific credit documents to be established, such as a Note and Deed of Trust. Buyers should ensure they understand the type of credit being extended and the terms associated with it.
  • Payment Responsibilities: Buyers are responsible for property-related payments, including taxes and insurance premiums. It is crucial to clarify whether these payments will be made directly to the seller or through an escrow agent.
  • Disclosure Requirements: Both parties must disclose their tax identification numbers by the time of settlement. This is necessary for compliance with federal reporting laws regarding mortgage interest.
  • Seller's Review Process: Sellers have the right to evaluate the buyer's creditworthiness through a credit report. If the seller finds the buyer's financial situation unacceptable, they can cancel the purchase contract or negotiate further.