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Carry Back

This packet includes the following documents:

  • Credit Application
  • Residential Sales Agreement
  • Lender's Promissory Note
  • Deed of Trust
  • Bill of Sale
  • Seller's Disclosure of Financing Terms
  • Seller's Disclosure Statement
  • Bill of Sale
  • Lead-Paint Disclosure Form
  • EPA Lead-Paint Brochure

This packet is used by:
The Seller Carry-Back Sales Agreement is used when you are selling a home and carrying
back a portion of the purchase price on owner-financing. This transaction is often used when
the Buyer cannot qualify for the full purchase price using traditional financing. The Seller will
loan the Buyer the difference between the purchase price and the amount the Buyer qualifies
for. This is essentially a private second mortgage. The Buyer makes monthly installment
payments to the Seller until either the loan is paid in full or a balloon payment becomes due.
The loan wil be in second place after the bank's mortgage.

The Documents:

Credit Application
The Credit Application is a crucial document for you to begin your due diligence into your
prospective buyer. The decision to finance even a portion of the home should be an informed

Residential Sales Agreement
The Residential Sales Agreement is a seller-friendly sales agreement and establishes the
rights of both the Buyer and the Seller. It should be completed with care and every space
requiring information should be filled in completely or with the insertion of the symbol "n/a"
meaning "not applicable." Once the required information in the document is inserted and the
agreement is signed by both parties, it cannot be changed by either the Buyer or the Seller
without the written consent of both parties. Both parties should have a copy of the completed
and agreement.

Promissory Note
A promissory note is a contract detailing the terms of a promise by one party (the maker) to
pay a sum of money to the other (the payee). The obligation under the promissory note is the
amount the Seller is financing pursuant to paragraph 3.3 of the Sales Agreement. The terms
of a note typically include the principal amount, the interest rate if any, the maturity date, and
the payee's rights in the event of a default.

Deed of Trust
The deed of trust is the security for the promissory note. It is the document that is recorded in
the public records and defines the rights and legal procedures in the event the Buyer does not
pay the Seller as required under the promissory note. A deed of trust contains three parties:
(1) the Trustor, which is the Buyer of the property, now the borrower under the note; (2) the
Trustee, which is an entity that holds "bare or legal" title; this is usually a title company or
attorney; and (3) the Beneficiary, which is the Seller of the property, now the lender under the
promissory note. Because the Trustee holds title in the deed of trust, it has broad powers,
including the "Power of Sale" (foreclosure) if the Buyer defaults on payments. When the Buyer
pays off the note, the Trustee reconveys the deed (title) back to the Buyer.

Seller's Disclosure of Financial Terms
When selling your property on owner-financing, you must disclose the terms of the financing
separately for the Buyer. This is sometimes called a "Truth in Lending" statement. Fil in
each blank carefully and completely.

Seller's Disclosure Statement
When selling real property, sellers generally have to provide the Buyer a Seller's Disclosure
Form setting forth the condition of the property.

Bil of Sale
The Bil of Sale is the document that transfers interest in personal property (as opposed to real
property) from the Seller to the Buyer. The personal property that was identified in Exhibit A to the Sales Agreement should be the property identified on the Bfii of Sale. Only the grantor,
meaning the seller of the property, need sign the document, but it should be notarized.

Lead-Paint Disclosure Form
Housing built before 1978 may contain lead-based paint. Lead from paint, paint chips, and
dust can pose health hazards if not managed properly. Lead exposure is especially harmful to
young children and pregnant women. Before renting pre-1978 housing, sellers must disclose
the presence of known lead-based paint and/or lead-based paint hazards in the dwellng. An
approved form has been provided in this package. The information should be carefully filled
out and the Buyer given a copy. Keep a copy for your records.

EPA Lead-Paint Brochure
In addition to the Lead-Paint Disclosure Form, owners of dwellings built before 1978 must also
supply a federally-approved pamphlet on lead poisoning prevention. This Brochure is included
in this packet.


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