Using Contract for Deeds (CFD)

Last Updated on Thursday, 14 July 2011 04:03 Written by Chris Griswold Saturday, 1 May 2010 09:22

“40 Acres, No Mule.”  I’m sure you can relate given that deals are hard to finance lately.  As a result, more than a few people have asked for assistance in helping them owner-carry (or buy some owner-carried) real estate.  During the conversation, people usually mention the “contract for deed” arrangement.  While still a legal way to convey property, it’s honestly not the most desirable way.  However, if you should find yourself in a situation where the other party insists on using it, read below to find out how to more effectively use the contract for deed (“CFD”).

Using CFD’s

Actual Conveyance. As a seller, you must realize that in signing the CFD, you have actually executed a legal conveyance to the buyer.  What does this mean?  It means you have sold it with just as much force and validity as if you had received the entire proceeds from the buyer’s lender at a conventional closing.  It also means that if the buyer defaults in their payments under the CFD, you’ll have to actually foreclose on the mortgage you hold (as opposed to simply terminating the CFD and demanding possession back like you’d do with a normal land installment contract).  This is, in part, why people have really gotten away from using CFD’s and instead started using conventional “mortgage, note and deed” vehicles.

Recording CFD’s; Escrowing Deed. As a buyer, you need to understand that, once signed, a CFD needs to be recorded with the relevant county clerk.  If the seller balks at recording, you need to walk away because that’s the only evidence which proves you own the subject property.  Also, as a buyer, you should require that the deed (which conveys title to you) be escrowed with a reliable person or entity such as an accountant, attorney or bank for future recording (which usually shouldn’t occur later than 10 years after signing the CFD).  Otherwise, the seller could die, change jobs, skip town or just move away and you’d be short a deed….

Due On Sale Clauses. Whether you’re a buyer or seller, you need to understand that the seller’s existing mortgage (if there is one) on the subject property will undoubtedly contain a “due on sale clause.”  This clause will require the immediate and full payment of seller’s existing mortgage if seller attempts to sell (or even long-term lease) the property (i.e., enter into a CFD).  This clause can cause countless problems with title insurance and property casualty/general liability insurance coverages.  Among them, who gets the proceeds upon a property casualty?  Who has an insurable interest?  If coverages are purchased by buyer, what will prevent the due on sale clause from triggering and, if so, who/what protects the buyer?


“WhichWich? is experiencing tremendous growth and we feel fortunate to have Chris Griswold, P.C. as our lead Real Estate Attorney during this time of expansion.  His knowledge, professionalism, tenacity, integrity and drive have given our brand an edge over our competition when securing premier locations throughout the country.  He continues to make our needs a priority and we look forward to working with him for many years to come.”

Jeff Vickers / Director of Development / Which?Which / Dallas, Texas

Learn More

Slippery Slopes

Last Updated on Thursday, 14 July 2011 04:03 Written by Chris Griswold Monday, 1 February 2010 09:20

Icy, snowy, slippery sidewalks (say it 3 times fast).  We’ve all seen our share this winter.  In response to a large number of inquiries I’ve received from concerned hotel, restaurant, office and retail owners and tenants, as well as the several requests I’ve received from our local insurance underwriting community that I write on the topic, I wanted to write a short piece in the hopes it saves some of you needless worry and, possibly, money.  Accordingly, I’ll answer the two most commonly asked questions from the groups mentioned above.

Questions About Slippery Slopes

Question #1:  “If I put out snow melt on my sidewalks, does it somehow serve as an admission of guilt if someone should subsequently slip and fall on the premises?

Answer: No. The very act of putting out snow melt, etc… in an effort to prevent people from slipping, falling and hurting themselves cannot later be used against you.  In other words, you can’t use someone’s efforts to avert an accident against them later on if and when the accident occurs.  If you could, it would be tantamount to saying “…I’m suing you for trying to help me.”  Now, there are other relevant factors including, but not limited to, whether or not another person slipped and fell in the same area just before the plaintiff slipped and fell, whether you put out enough – and many others.  However, the fact that you put out snow melt, in and of itself, is not an admission of guilt; nor can it later be used against you in showing negligence.  Accordingly, don’t be afraid to put out snow melt when the weather gets bad.  However, and most importantly, when you put it out, put out enough to really do the job (including getting out your shovel if need be so the area(s) in question are clean, clear and safe).

Question #2:  “When should I put out snow melt?

Answer:          It depends. Actually, the legally correct answer to this question is “when it’s reasonable to do so.”  Say what??!  I know…, it’s legalese and not really clear.  However, you can pretty much nail it down if you ask yourself the following question: Given the current weather conditions; if my mother came to see me at work today, should I put out snow melt? If the answer is yes, put it out.  Otherwise, don’t sweat it.

“Chris Griswold has always been proactive and professional.  He takes the time to work with us and tailors his approach to our situational needs.  My favorite thing about Chris is that he will let me know if there is an easier, less-expensive approach.  We look forward to working with him well into the future.”

Carl S. Milam / President / Western Concepts Restaurant Group / Oklahoma City, Oklahoma

Learn More

The Covenant of Quiet Enjoyment – What is it, why is it there & what implications follow?

Last Updated on Thursday, 14 July 2011 04:04 Written by Chris Griswold Thursday, 1 October 2009 09:20

Listen up landlords, tenants, subtenants, brokers and lenders.  Sometimes, for whatever reason, we do something so many times that we actually forget the significance of doing it.  As regarding the typical commercial lease, there are certain provisions that, for some long-forgotten reason, appear again and again.  But why?  One of these provisions, the covenant of quiet enjoyment (which the Landlord owes to the Tenant), is really worth brushing up on.  Read more below….

The Covenant of Quiet Enjoyment – What is it, why is it there & what implications follow?

Some anonymous person once humorously noted “…I have my mind made up so don’t try to confuse me with the facts.”  We’ve all seen the covenant of quiet enjoyment expressed in the leases we negotiate.  It ordinarily reads something to the effect of “… Tenant may peaceably and quietly have, hold and enjoy the premises for the term aforesaid….”  However, what is this covenant, why is it there & what implications follow from the parties expressly addressing it in their lease?

What is it? The covenant of quiet enjoyment is the legal mechanism which prevents a landlord (or anyone for whose conduct the landlord is responsible) from “interfering” with a tenant’s use and enjoyment of the leased premises during the lease term.  Interestingly enough, if this covenant is not expressly spelled out in the lease (or if the lease was made orally), the law actually implies (i.e., inserts) this covenant into the lease.  When the law implies this covenant into the lease, the upshot is that upon such “interference” by landlord, the tenant doesn’t have to pay rent and can even elect to terminate the lease.

If the law implies it into every lease, why do I always find it written into every lease? Even though the law implies this covenant into every lease, the parties to a lease can still modify and condition the enforcement of this covenant by tenant.  Accordingly, when the language relating to the covenant of quiet enjoyment appears in the lease, it’s actually restricting and conditioning tenant’s rights – not enlarging them…. That’s why your lease reads that “…upon tenant’s payment of rent and observance of all the terms and provisions of this lease as contained herein, tenant may peaceably and quietly have, hold and enjoy the premises for the lease term contained herein….”  Remember, in the beginning, landlords’ counsel drafted the leases to serve the best interests of landlords, not tenants.  Since that time, due to all the leases that have been executed over the years, it has become a custom that Tenant will have to pay rent and perform all of their lease obligations prior to enforcing the covenant of quiet enjoyment against Landlord (which is reverse of how the law would otherwise imply).

What implications follow from the parties expressly addressing it in their lease? Basically, once the covenant of quiet enjoyment is expressed (i.e., conditioned) in the lease, it’s incumbent upon the tenant (and even the landlord) to carefully draft the lease provisions so that their interests are protected.  Why?  Upon seeing that the parties have chosen to negotiate their own particular terms as relating to the covenant of quiet enjoyment, the courts will not, absent certain circumstances, modify such negotiated terms.  So, negotiate carefully and write well….


“I take special care when selecting business partners to represent my company and look for those who exhibit the same levels of professionalism and integrity that I try to achieve.  Chris Griswold definitely meets these requirements and is considered a very valuable member of the JOBO Properties team.  I have no hesitation in recommending Mr. Griswold to handle your business and commercial real estate transactions.”

Darren Ford / Owner & Developer of JOBO Properties, L.L.C. / Oklahoma City, Oklahoma

Learn More

1105 Myrtle Drive
Edmond Ok, 73034
405.229.7595 (cell)
405.840.1019 (office)

A signed retainer agreement shall precede any attorney/client relationship.
We accept VISA, Mastercard and now Discover too.

"Getting Your Deal Done"

Designed by