With economic times being tough, and the availability of mortgage financing even tougher, Vermont attorneys are seeing an increase in requests from their clients for seller financing. When the seller provides financing it can be beneficial to both parties. The seller is able to sell their property, and the buyer can save thousands of dollars in closing costs. Of course, the seller will want the loan secured by a mortgage on the property being transferred. However, under Vermont law, if a license is required and the seller does not obtain the required license, enforcement and even collection, of their loan is at risk!
Title 8 Vermont Statutes Annotated Chapter 73 forbids individuals from a) engaging “in the business of making loans of money, credit, goods, or things in action and charge, contract for, or receive on any such loan interest, a finance charge, discount, or consideration therefor;” b) acting as a “mortgage broker”; or c) engaging in the business of “a mortgage loan originator”.
There are exceptions to the requirement that a license must be obtained. A loan to an immediate family member may not require a license. And a license may not be required if the seller is not in the business of making or originating loans.
The law in Vermont is complicated and the risks are great. Before you agree to finance your sale, you should consult with your attorney.