Guide To Document Preparation in Seller Financing

Seller financing

Seller financing can be advantageous for both buyers and sellers. However, the absence of a traditional lender shouldn’t make the deal any less official. You’ll need to prepare and sign documents like a conventional home sale. This post will cover the basics of document preparation for seller financing.

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Seller Financing Document Preparation

Purchase Agreement

Just like with a conventional sale, you might have a purchase agreement. The purchase agreement outlines the terms under which the sale will happen. It will include the details of both parties, the sale price, interest rate, down payment, contingencies, and more. This document puts the property under contract during due diligence.

Promissory Note

The promissory note is the financial instrument for the loan. It outlines the loan terms and the consequences if the buyer defaults. This document will outline the same terms as the purchase agreement, but it makes the loan official. It may also include additional details and terms vital to the agreement.

Deed of Trust

Many seller financing agreements use a deed of trust. With a deed of trust, the buyer and seller agree to have a neutral third party hold the title. The trustee holds the title until the buyer meets their obligations under the agreement. Once that occurs, the trustee can transfer the title to the buyer. It is a way to protect the interests of both the buyer and the seller.

Notary Services

The deed of trust will need notary services to be official. You should also record a copy of the deed of trust with the county. The purchase agreement and promissory note can both be binding without notary services. However, the services of a notary can be valuable. A notary seal can help the documents stand up in court if there is an issue. The notary can also review the documents to ensure they include all the necessary terms and information.


Just like any other home sale, there will be a closing on the deal. The parties will execute the promissory note and other documents related to the agreement. Closing may occur at the office of an attorney or title company. The closing is also where the parties create and sign the deed of trust for the transaction.

Seller financing agreements can be complicated, and concerns may vary depending on the circumstances. Buyers and sellers should consult an attorney for assistance with seller financing.

Tennessee Title Services

Do you need title services for a seller financing agreement? Click here to contact the Title Group of Tennessee. We are local title experts who can help streamline the process while ensuring security.

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