Legal Question in Real Estate Law in Minnesota

contract for deed interest rate?

Hi, I was told there is a minimum interest rate on a contract for deed, like 2.5% is this right? or can it be negotiated with seller? or no interest at all.


Asked on 10/24/03, 12:10 pm

1 Answer from Attorneys
David Kelly-952-544-6356 Kelly Law Office

Re: contract for deed interest rate?

Depends on which ball park you are playing in. As far as Minnesota law goes, there may be a maximum, but I never heard of a minimum.

Trouble is, however, that if you do not include a reasonable interest rate, the IRS might impute one in the event that the seller is audited. In other words, the IRS will call part of the payment interest whether the contract for deed does or not.

Complicated stuff. Bad idea to do it without a lawyer. If you try it, you'll wish you hadn't.

Good luck.

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Answered on 10/25/03, 6:38 pm


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