DEAR BOB: If I sell my rental house to my tenant and carry back a mortgage for my buyer, what happens if the buyer-tenant goes bankrupt? Is there any way I could lose my right of foreclosure to some other creditor? –Bill K.

DEAR BILL: No. Your seller-carryback mortgage (or deed of trust) should be secured by the rental house you sell to your tenant. If your buyer files Chapter 7 or Chapter 11 bankruptcy, you remain a secured creditor because your mortgage (or deed of trust) is recorded against the house’s title.

Purchase Bob Bruss reports online.

Nobody can get ahead of you in priority (except the local property tax collector who always has top priority for unpaid property taxes). You might have to wait to get paid, but you have the mortgage security recorded against the property you sold to the tenant.

The best thing that could happen to you (but probably won’t) is: you have to foreclose; no bidders show up at the foreclosure auction; and you get the property back to sell again for a second profit. That happened to me only once, but it was very profitable. For details, please consult a local real estate attorney.


DEAR BOB: I own five acres zoned for up to six houses per acre in a fast-growing area. A real estate agent wants a 5 percent sales commission and a six-month listing with six more months of commission if I sell after that. Isn’t 5 percent a lot considering this is a small property? –Jean-Claude B.

DEAR JEAN-CLAUDE: No. A 5 percent sales commission for a vacant land sale is quite reasonable. The customary sales commission for land sales is up to 10 percent of the gross sales price. Sales commissions are negotiable. Selling vacant land isn’t as easy as selling a house.

A six-month listing term is fair for vacant land. However, that “savings clause” of 180 days after the listing expires should apply only to prospects that the listing agent registers with you during the listing term. Be sure it doesn’t apply to any sale you make on your own to somebody who was not introduced to the land by the listing agent or a cooperating buyer’s agent.


DEAR BOB: I bought a Florida house direct from the seller. No agent. Part of the well equipment was rented. But the seller told me he owned it. I took the seller to Florida court and won a judgment against him without using a lawyer. But the seller has now moved to Georgia. I contacted a Georgia lawyer who tells me it would cost more for his services than the judgment is worth. Do I just have to forget about collecting this Florida judgment? –Joan O.

DEAR JOAN: If you have a large judgment, and if the seller owns any other Florida real estate, it may be worthwhile recording your judgment in the counties where he owns real property. When he eventually sells such Florida property, then your judgment must be paid to deliver marketable title.

Or, you can take your judgment to Georgia and have a Georgia attorney enter it in the court records where your seller now lives. Under the Full Faith and Credit clause of the U.S. Constitution, your Florida judgment can then be recorded as a Georgia judgment. When the seller goes to sell hisGeorgia property, then your Florida judgment must be paid in full if it is recorded in the county where that property is located. For details, please consult a Georgia attorney.

The new Robert Bruss special report, “How to Sell Your Home for Top Dollar in a Buyer’s Market,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center

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