Listing broker's seller is considering selling the property using seller financing. Seller has instructed broker to draft the deed of trust or real estate contract to include a provision requiring title to the property to automatically revert to seller if buyer defaults. Can a deed of trust or real estate contract include a provision like that?


No. If buyer defaults on a note secured by a deed of trust or a real estate contract, the seller's options for recovering title to the property are subject to statutory processes. Both the "Deeds of Trust Act" and the "Real Estate Contract Forfeitures Act" require seller to give the buyer certain notices and opportunities to cure the default before the seller can take action that will result in recovering title to the property. Any attempt to eliminate these statutory protections to the buyer would violate the controlling state law. Broker should advise this seller to seek legal counsel. Broker's authority to draft a purchase agreement does not extend to drafting modifications to either a deed of trust or a real estate contract that may be used by the parties in fulfillment of a seller financing transaction. A deed of trust and a real estate contract are not purchase agreement forms. Rather, they are loan documents and real estate brokers are not licensed to "draft" loan documents. Statewide Form 22C contemplates broker's attachment of a standardized deed of trust or real estate contract to the addendum for creation of a seller financing transaction but broker has no authority to modify the standardized terms of either the referenced deed of trust or the referenced real estate contract.

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The Legal Hotline Lawyer does not represent Washington REALTORS® or its members. The advice contained herein does not constitute legal counsel. Please consult with your managing broker for best practices.

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