Balcomb & Green, P.C., A Full Service Law Firm.
Contact Us
(970) 945-6546 / (800) 836-5928
Email Balcomb & Green, P.C.

Balcomb & Green - Disclaimer
We are pleased to provide you with this form to establish contact with Balcomb & Green, P.C. Do not use this form to convey information to Balcomb & Green, P.C., whether confidential or not, that is related to a specific legal question or matter. We are not required to treat information that you provide to us as confidential unless we have established an attorney-client relationship. It is possible that we represent a party adverse to you, and the information you provide here may be used against your interests. As a result, you should use this form only to describe your general inquiry. For example, you might enter: "I need legal advice about a landlord-tenant relationship;" or "I have a question about my water rights;" or "I wish to speak to an attorney about a real estate contract." If we may be able to assist, one of our attorneys will contact you and determine that there is not a conflict of interest before discussing the details of your matter.

Contacting Balcomb & Green, P.C. or any of its attorneys, whether through this website or by email, telephone, facsimile or surface mail, does not create an attorney-client relationship. Creation of an attorney-client relationship requires an express and specific agreement between you and Balcomb & Green, P.C., and can only occur after consultation and investigation of possible conflicts of interest. We look forward to serving you.

I have read and agree with the terms above.

or

Click here to cancel.

New Federal Regulations Complicate Seller Carry Back Financing in Colorado


Posted on 1/21/2014 by Chad Lee
Glenwood Springs real estate lawyers are preparing for an increase in seller carry back transactions, not due to ongoing tepid residential real estate recovery, but because new federal regulations complicate the legal landscape for seller financing. On January 10, new regulations from the Consumer Financial Protection Bureau (CFPB) require all lenders (including sellers carrying back a note), to comply with a complicated list of new regulations intended to protect borrowers.

One of the CFPB’s regulations is the “Ability to Repay” rule (ATR), which requires lenders to confirm and verify a debtor’s ability to repay the loan on residential mortgages, based on a good faith determination supported by documentation. There are stiff penalties for parties who do not comply with ATR. Sellers who plan to carry back financing on their home are required to comply with ATR unless they meet the exemption. The exemption is narrow and, in general, requires: (1) that the Seller be a natural person; (2) that the Seller carry back financing only once during a 12 month period; (3) that the Seller not act as a general contractor on the home, or similar (i.e. – the exemption probably does not apply to “spec” homes); (4) that the loan not result in “negative amortization;” and (5) that the interest rate be fixed, or adjustable after five or more years subject to limitations on annual rate increases. This is a general overview of the criteria. Sellers and their realtors should seek the advice of a real estate attorney to determine whether the exemption applies and to draft appropriate documentation.

The 2014 Colorado Real Estate Commission standard contract now advises all parties to seek the advice of an attorney in seller carry back situations. Sellers and realtors should heed this advice, because they can both be hit with large penalties for failing to comply with ATR and other Dodd-Frank regulations. Critics have alleged that Dodd-Frank regulations are responsible for the lack of available credit for qualified buyers in today’s real estate market, and banks may be wary to lend given the harsh penalties for violating one of the many regulations, such as ATR. Seller carry back financing, however, provides another viable option for sellers and buyers.

Seller carry back financing remains a viable option in the Glenwood Springs’ real estate market. It provides a collaborative option for buyers who may not otherwise be able to obtain financing given the current lending market, and a long term source of cash flow for sellers. If structured properly, it can provide certain tax benefits, such as recognition of only a percentage of the overall capital gain in any one tax year. Sellers and realtors interested in structuring deals with seller carry back financing should consult a real estate lawyer to ensure the transaction complies with the ATR and applicable Colorado law as well.

Chad J. Lee is a partner at Balcomb & Green, P.C.. He focuses his practice on real estate development, purchases, and sales in and around Glenwood Springs, Colorado.

Google
Review Us
Visit Balcomb & Green on Google+


Balcomb & Green, P.C. Locations
Glenwood Springs Office

818 Colorado Ave
Glenwood Springs, CO 81601
Office: (970) 945-6546 / (800) 836-5928 Fax: 970.945.8902
Aspen Office

133 Prospector Rd, Suite 4102E
Aspen, CO 81611
Office: (970) 945-6546 / (800) 836-5928
Basalt Office (The Myler Law Firm)

211 Midland Ave, Suite 201
Basalt, CO 81621
Office: (970) 927-0456


About Us  | Practice Areas  | Attorneys  | Our Offices  | Clients  | Careers  | Community  | Firm News  | Make Payment Online  | Sara M. Dunn  | Robert C. Gavrell  | Christopher L. Geiger  | Erika Gibson  | Lawrence R. Green  | Scott Grosscup  | David C. Hallford  | Thomas J. Hartert  | Benjamin M. Johnston  | Chad J. Lee  | David Myler  | Eric M. Theile  | Timothy A. Thulson  | Lucas Van Arsdale  | Stephen J. Worrell  | Business Law  | Estate Planning  | Litigation Services  | Local Government Law  | Natural Resources Development  | Real Estate Attorney  | Water Law Attorney  | Title Examination Services  | Glenwood Springs  | Aspen  | Basalt

This website is designed for general information only. The information presented at this site should not be construed to be formal legal advice, nor the formation of a lawyer/client relationship. Persons accessing this site are encouraged to seek independent counsel for advice regarding their individual legal needs. © Balcomb & Green, P.C.
Copyright © 2012-2017 Balcomb & Green, P.C. and WEO MEDIA. All rights reserved.  Sitemap | Links
Balcomb & Green, P.C., 818 Colorado Avenue, Glenwood Springs, CO, 81601 - Associated Words: attorney Glenwood Springs CO | lawyer Glenwood Springs CO | attorney Glenwood Springs CO | (970) 945-9377 | www.balcombgreen.com | 9/19/2017