Utah Couple Discovers Seller Financing Deal Leaves Home at Risk of Foreclosure

A Utah couple bought a $1 million home after paying $750,000 upfront and agreeing to pay the sellers an additional $380,000. The buyers said they thought the transaction was a seller-financed purchase and that the deed transfer confirmed ownership. They later found that the sellers had kept their original mortgage, which still carried a balance of about $320,000.

Personal finance commentator Dave Ramsey said most standard mortgages contain a due-on-sale clause that allows the lender to demand full repayment within 30 days if ownership changes without approval. Ramsey stated that if the lender learns of the transfer and the sellers cannot repay the loan, the lender could foreclose on the property.

The buyers also reported that the homeowner's insurance policy had not been updated and remained under the sellers' names. Ramsey said the policy could be considered invalid because the sellers no longer hold legal ownership of the home. Co-host Jade Warshaw described the arrangement as a mess after hearing the details.