Land+home contract question

[RutnBuk]

I have some clients interested in me building a house on my land. They want to buy 10 acres first and then use it as collateral for the construction loan. Im giving them a better deal on the land since I'm to put a house on it, instead of just selling the land outright. One issue that I'm having trouble getting around is what if they decide to not build or use another builder? How can I protect myself from this happening? Thank you

[Birddog66]

I have some clients interested in me building a house on my land. They want to buy 10 acres first and then use it as collateral for the construction loan. Im giving them a better deal on the land since I'm to put a house on it, instead of just selling the land outright. One issue that I'm having trouble getting around is what if they decide to not build or use another builder? How can I protect myself from this happening? Thank you

Sounds like something that could be written into contract and made a contingency, but you would need a RE attorney to make it legal.

I've seen deed restrictions that have time frames about building. Maybe add that they can only use you as builder as well? Not sure, attorney question.

[hbender1]

Sounds like they're paying cash for the 10 acres. The only part that can be used as collateral is the equity.

The deed restrictions as BD66 stated would seem to be the answer.

It's worth a couple hundred bucks to get a RE attorney to draw it up the way you want.
Probably not too difficult to find one that will give you a general idea of what you can or can't include.

[RutnBuk]

Awesome. Thank y’all.

[texan4ut]

Sounds like they're paying cash for the 10 acres. The only part that can be used as collateral is the equity.

The deed restrictions as BD66 stated would seem to be the answer.

It's worth a couple hundred bucks to get a RE attorney to draw it up the way you want.
Probably not too difficult to find one that will give you a general idea of what you can or can't include.

That's not true you can borrow what the land is worth if you own it out right as in paid cash. If you finance the land then you can only borrow the equity because the 1st lien holder has the right to the property if you default.

[wloftis]

If you are concerned; do a long term ground lease with purchase option. Put certain wording in your contract that protect you from your concerns (be it: termination, no trailer parks, etc.), and "lease" it to them for 99 years (for example; term obviously being debatable). That could turn into cash flow for you, but at the same time any improvements to the land become your families after that term ends.

[CEO]

Sell the land at market value and offer the discount on the home build.

[Hogmauler]

Have an attorney put it in writing!

[Capp35]

Sell the land at market value and offer the discount on the home build.

This ^^^

[wsteffen]

Couldn't you do a contract to build the house at the same time as the land sale? Put a clause in there with a penalty if they don't have you build the house within a certain period of time.

[RutnBuk]

I think I have it figured out now. He agreed to buy the land for 30K more and I will build the house for 30K less. Thank yall