Guide to Seller Finance (Owner Finance) Transactions

Seller Finance Transaction Guide

Seller-financed deals, also called seller carry or owner finance, can be a good option for both buyers and sellers looking to avoid traditional (bank) financing for a real estate or personal property transaction. 

Oklahoma law allows seller financing, but all parties to a seller finance transaction should be careful to protect themselves. Fortunately, having the right kinds of written agreements and the right terms within those agreements will benefit all parties. 

While each seller finance transaction is unique, some documents are common for this type of deal.

What types of deals can be seller financed in Oklahoma? 

Common seller finance transactions in Oklahoma include residential real estate sales, commercial real estate sales (although it is less common than residential transactions), business asset sales, business ownership and equity sales, and personal property sales (such as cars, trucks, boats, RVs, trailers, utility vehicles, etc.).

Mobile and manufactured home sales receive special treatment under Oklahoma law.

What are the common documents needed in a seller-financed transaction?  

• Purchase and Sale Agreement (PSA). This document ensures all parties get the asset and each other under contract and bound to certain terms and timelines. Some buyers may prefer a contract for deed, lease-to-own, rent-to-own, or other type of arrangement which may be less than a full equity transfer upon initial closing; contact us for assistance with these unique types of contracts.
• Mortgage, Lien, or Security Agreement. This document ensures the seller who is acting as the lender/bank/finance company is given certain rights, such as a security interest, in the asset. The type of document may have a power of sale, power of foreclosure, right of repossession, a seller’s right to periodically inspect the asset that serves as collateral, and more.  
• Promissory Note (Note). A promissory note is usually the primary financial instrument in a seller finance transaction. This type of document is crucial for clearly and plainly describing the financing terms, interest rates, and the dates and times that payment should be made. 

Other helpful documents:

• Statement of Authority, Declaration of Trust, or Documented Proof of Agency. If the buyer is a trust, corporation, LLC, or any other entity that is a non-natural person, the seller should insist on receiving some form of affirmative and written statement that the buyer has authority to sign contracts and financing documents on behalf of the entity. The title of this type of document will vary based on the type of entity involved in the transaction and the level of proof of authority necessary. 
• Deeds and Certificates of Title. Oklahoma is a lien theory state. That means the buyer must be given a deed or certificate of title showing the buyer’s name as the new owner of the property. However, the seller is protected by having their mortgage recorded on the property or the seller’s name listed as a lienholder on a certificate of title. See our article on types of deeds in Oklahoma.

What happens if the buyer defaults on the payments?

If a buyer under a seller-financed transaction misses required purchase price installment payments, the seller may have the right to pursue foreclosure of the loan. See our article on seller finance default and foreclosure for more information. This article also gives a helpful explanation of how seller financing works in the event of a default.

Get Help With Your Transaction

The attorneys at Avenue Legal Group are knowledgeable and capable of representing any party at any stage of a seller-financed transaction, no matter what type of asset is being financed. Contact us by phone, text message, email, or our website to discuss your transaction.