Minnesota (KTTC) –Minnesota’s Attorney General, Keith Ellison is sending a scam warning to Minnesotans who are in the home-buying market.
Ellison says you should avoid a ‘contract for deed’ when buying a house.
This is a contract between a home buyer and a home seller where the seller agrees to accept payments over time instead of the buyer paying all at once.
Ellison says this method is extremely risky because buyers have less protection than with mortgages, which opens the door for scammers and bad actors.
He says it’s essential for any Minnesotan purchasing a home on a ‘contract for deed’ to understand the contract and what your rights and responsibilities are before signing.
Some of the things you may want to look for include:
- Check that the seller has paid the home’s property taxes and ensure that the home is not in foreclosure
- Make sure you know whether the contract has a balloon payment and if so, what the size of that payment is and when you will be expected to pay it
- Have a plan to pay off the whole contract and pay for yearly property taxes and maintenance before entering into the contract
- Get a home appraisal along with an inspection to make sure you are not overpaying
- Understand that you will be responsible for the costs of repairs, property taxes and general upkeep of the home once the contract is signed
- Know what the interest rate you are being charged by the seller is and check rates with lenders to see if the rate being offered is competitive
- Make sure that the contract is recorded with the county recorder’s office within four months of signing, recording the contract may give you more protections
If a scam happens to you, report it. Many people feel embarrassed when they have been scammed but con artists and scammers are professionals with experience. They bank on people feeling too embarrassed to protect others by speaking out.
If you fall victim to this type of scam, report it to Ellison’s office immediately by clicking here.
You can also contact the Attorney General’s Office by calling (651) 296-3353 or (800) 657-3787.
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