Legal Question in Real Estate Law in New York

Re: Creative Financing

If the seller wants to hold the mortgage that is fine, but he will not be able to keep the current mortgage and give you title, assuming you use a title company to make sure title is clear (which is strongly recommended). If your credit is bad then the bank probably won't approve you to assume the mortgage, especially if the rate is lower then the current rate. The only solution is for the seller to loan or mortgage you the money. His attorney should be able to draw up the papers and you definitely need an attorney to review the loan documents.

Re: Creative Financing

I give all my clients advice, before buying any real estate, to hire an engineer to look at the house. Make sure the engineer is independent of either the real estate broker or the seller.

A mortgage constitutes a lien on the house. It secures payment of a promissory note that was signed by the owner of the house. Most mortgages state that a default occurs if you deed the house to another without informing the bank. If an individual defaults on the mortgage, the bank has the option of calling in the loan. This is the risk that you would assume if you purchase the house without satifying the seller's mortgage.

Assuming you want to take that risk, if you file a deed with the County Clerk transferring title from the Seller to you, you own the property. You would have to be notified of any foreclosure proceeding by the bank.

Finally, I would not trust the Seller to make payment on the mortgage. I would make payment to the bank directly to insure payment on the mortgage.