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Carryback loan on land

Weighing Options for Seller with Carryback Loan on Land

By Christopher Combs | February 28, 2021

Question: In one of your columns a buyer had purchased forty acres of land in northern Arizona (“Forty Acres”) with financing for the purchase of this Forty Acres by a seller-carryback $200,000 five-year mortgage loan. After five years, however, there had been none of the anticipated development in the area, and the Forty Acres was only worth $100,000. In your column you said that the seller could choose not to foreclose on the Forty Acres, but could file a lawsuit against the buyer for the failure to pay the $200,000 promissory note. In my opinion, however, after the seller sues on the $200,000 promissory note and gets a $200,000 judgment, the seller still has to collect on the $200,000 judgment. What if the buyer has no assets, moves out of state, or files bankruptcy? Wouldn’t it be better for the seller to foreclose on the $200,000 loan, and bid the…

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cattle ranch

Purchasing a Home with a Ground Lease

By Christopher Combs | February 21, 2021

Question: We are buying a retirement home in an east Scottsdale community. After we received the title report, we were shocked to learn that the “owner” of our retirement home was actually a tenant under a 99-year ground lease for all of the homes in the community. Our real estate agent said that we are getting a reduced price for our retirement home because of the ground lease, and that there are only 60 years remaining on the ground lease. We know that a reduced price is an advantage of the ground lease. Is only 60 years remaining on the 99-year ground lease a major disadvantage? Answer: Probably not. There are other areas of the Valley, for example, the Park Central area and the Biltmore area in central Phoenix, that have ground leases. Interestingly, the Biltmore area ground lease was originally a cattle ranch surrounding the Town & Country shopping…

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