If you hold a Contract for Deed and the buyer is behind on payments (the technical term delinquent or in default), you are probably wondering if you can cancel the Contract for Deed under Executive Order 20-14.  The short answer is that you probably can.

Executive Order 20-14 requests mortgage holders not to begin foreclosure proceedings, and urges them not to impose late fees and penalties.  In other words, this is a request - not a prohibition.  I don't think there is anything in the order that prohibits you from cancelling a contract for deed.  Normally, when you cancel a contract for deed, the vendee (the buyer) has 60 days to get current, or the vendor (the seller) can evict the buyer.  Here is an article that I wrote on what to do if a vendee does not pay up and stays in the property:

https://balandlaw.com/blog/what-should-you-do-if-a-contract-vendee-under-a-contract-for-deed-does-not-move-out-after-you-cancel-the-contract

However, Executive Order 20-14 temporarily suspends your right to evict.residential vendees for the duration of the peacetime emergency - and who knows how long that will be?  As such, you can't even bring an eviction against a residential vendee, and 20-14 prohibits the County Sheriff from enforcing the Writ of Recovery.  Violating 20-14 is a misdemeanor, and I don't know of any contract vendor who would risk being charged with a misdemeanor.

Nevertheless, there is no similar provision in 20-14 prohibiting evictions for commercial vendees, so you can definitely cancel and then bring an eviction against a commercial vendee.  However, the hearing on your eviction will probably not be scheduled for a while - at least as long as the peacetime emergency lasts - in accordance with the court's case priorities list.

If you have a contract for deed vendee who is not making payments, or if you have canceled a contract for deed according to statute but the vendee is still in the property, then I recommend that landlords talk to an attorney experienced in evictions before taking action based on this blog post, especially in light of the Executive Order.  To that end, you should give me a call at 763-290-0445 to discuss your situation. The first thing I will ask you is what you want to have happen because, ultimately, the you are in control..

WARNING: The information contained in this blog post does not constitute legal advice and may not be applicable to your situation.  Tim is licensed to practice law only in Minnesota, and the information contained in this blog post may not apply to jurisdictions outside of Minnesota.  Further, reading this blog post does not create an attorney-client relationship between you and Baland Law Office, P.L.L.C.  You should always discuss your situation with an attorney before taking any action based on what you may read in this blog.  To that end, please call (763) 290-0445 to set up an appointment to discuss your situation.



 

What do you do if you have sold real estate someone (the contract vendee) under a contract for deed who refuses to move out or pay up after you cancel the contract. In a contract for deed, the seller (vendor) provides financing to the buyer (vendee), but the vendor retains legal title and legal ownership of the property, but the vendee has equitable title – the right to occupy and be in the property.  Typically, the vendee seems trustworthy and solvent when you sign the contract, but then does not make payments due under the contract for whatever reason – loss of job, medical emergency, or some other reason.

The question becomes what do you do if a contract vendee is not making the payments due under the contract? The short answer is that the vendor has to cancel the contract for deed. There is a statutory notice of cancellation that gives the vendee 60 days to pay up, but the next question is what happens after those 60 days are up and the vendee has not paid up or moved out?

The contract vendor has to bring an eviction action against the contract vendee to remove the contract vendee from the property. Basically, the eviction complaint says just that – that the vendee is still on the property after 60 days from the date of cancellation.

After you file and serve the eviction, a hearing will be scheduled within 2 weeks. It is your responsibility as contract vendor to have the eviction served within one week of the date of the hearing. At the hearing, one of 4 things will occur:

1. The vendee does not show up, and you win by "default." In other words, you win because the vendee did not appear. In that case, the judge will issue a Writ of Recovery of the premises, which is an order of the court for the Sheriff to remove the vendee from the property.

2. 
The vendee does show up, and you are able to work out some sort of agreement – typically whereby the vendee either agrees to pay everything that they owe on an acceptable schedule to you or the vendee agrees to move out by a certain date that is acceptable to you.

3. The vendee does show up, and you are not able to work out any kind of agreement. In that case, you will appear before a judge. If the vendee admits that they were given proper notice and are still in the property, the judge will issue an order kicking them out (the writ of recovery). The judge has the authority to stay the writ of recovery for up to 7 days if there is a finding of substantial hardship – typically minor children or an obvious physical or mental disability. In practice, most judges will stay the writ for 7 days, although that varies from county to county.

4. The vendee shows up and asks for a trial on the validity of your cancellation. Basically, the vendee would argue (and would have to prove) that the notice you gave did not meet with the requirements of the statute authorizing you to cancel the contract for deed.

I generally advise clients not to enter into contracts for deed. What do you do if you have sold real estate someone (the contract vendee) under a contract for deed who refuses to move out or pay up after you cancel the contract. In a contract for deed, the seller (vendor) provides financing to the buyer (vendee), but the vendor retains legal title and legal ownership of the property, but the vendee has equitable title - the right to occupy and be in the property.  Typically, the vendee seems trustworthy and solvent when you sign the contract, but then does not make payments due under the contract for whatever reason - loss of job, medical emergency, or some other reason.

The question becomes what do you do if a contract vendee is not making the payments due under the contract? The short answer is that the vendor has to cancel the contract for deed. There is a statutory notice of cancellation that gives the vendee 60 days to pay up, but the next question is what happens after those 60 days are up and the vendee has not paid up or moved out?

The contract vendor has to bring an eviction action against the contract vendee to remove the contract vendee from the property. Basically, the eviction complaint says just that - that the vendee is still on the property after 60 days from the date of cancellation.In other words, the vendee is "holding over" on real property and can be evicted for that.

After you file and serve the eviction, a hearing will be scheduled within 2 weeks. It is your responsibility as contract vendor to have the eviction served within one week of the date of the hearing. At the hearing, one of 4 things will occur:

1. The vendee does not show up, and you win by "default." In other words, you win because the vendee did not appear. In that case, the judge will issue a Writ of Recovery of the premises, which is an order of the court for the Sheriff to remove the vendee from the property.

2. The vendee does show up, and you are able to work out some sort of agreement – typically whereby the vendee either agrees to pay everything that they owe on an acceptable schedule to you or the vendee agrees to move out by a certain date that is acceptable to you.

3. The vendee does show up, and you are not able to work out any kind of agreement. In that case, you will appear before a judge. If the vendee admits that they were given proper notice and are still in the property, the judge will issue an order kicking them out (the writ of recovery). The judge has the authority to stay the writ of recovery for up to 7 days if there is a finding of substantial hardship – typically minor children or an obvious physical or mental disability. In practice, most judges will stay the writ for 7 days, although that varies from county to county.

4. The vendee shows up and asks for a trial on the validity of your cancellation. Basically, the vendee would argue (and would have to prove) that the notice you gave did not meet with the requirements of the statute authorizing you to cancel the contract for deed.

I generally advise clients not to enter into contracts for deed. If the potential buyer is unable to obtain financing from a third-party such as a bank, credit union, or other mortgage provider, there is probably a good reason why they were unable to obtain such financing. You are not a lender – rather, you are a seller.  You should not provide financing to a potential buyer who cannot obtain financing from a third-party lender.

However, there are some circumstances when it makes sense to enter into a contract for deed. I would recommend that you vet any potential contract for deed vendee to make sure they have a long employment history and solid credit score. If you are going to provide the financing, you want as little risk as possible.

If you have a contract for deed vendee who is not making payments, or if you have canceled a contract for deed according to statute but the vendee is still in the property, then I recommend that landlords talk to an attorney experienced in evictions before taking action based on this blog post.  To that end, you should give me a call at 763-450-9494 to discuss your situation. The first thing I will ask you is what you want to have happen because, ultimately, the you are in control..

WARNING: The information contained in this blog post does not constitute legal advice and may not be applicable to your situation.  Tim is licensed to practice law only in Minnesota, and the information contained in this blog post may not apply to jurisdictions outside of Minnesota.  Further, reading this blog post does not create an attorney-client relationship between you and Baland Law Office, P.L.L.C.  You should always discuss your situation with an attorney before taking any action based on what you may read in this blog.  To that end, please call (763) 450-9494 to set up an appointment to discuss your situation.