Question (AL): My parent's are currently involved in an "owner financed" contract. They have tried several different mortgage companies in an attempt to refinance, but have been told that since the title is not recorded in their name that they are not technically purchasing the home. However, they have paid the taxes (they are listed in my father's name), and also include an insurance payment with their monthly payment to the owner. In addition, the contract says that the seller's are not liable for any repairs. This seems to be neither a rental contract nor a mortgage. Is this legal? My parents did put up a down payment on the property, though I am not sure if that affects anything. Your response is much appreciated.

Answer: It sounds like your parents may have a purchase agreement where the "sale" is actually a "contract for deed." A Contract for Deed is sometimes also known as a Land Contract, Agreement for Deed, Contract Sale or Real Estate Installment Agreement. This type of Document allows the Seller to retain the title to the property and agree to transfer the title to the Buyer once all the payments under the Agreement are made and all other obligations are met.

In essence, the Seller finances the purchase and holds the title or deed as security. When the Buyer completes the required payments, the Seller must deliver valid legal title by way of a deed. During the period of the contract, the Buyer makes installment payments on the purchase price and is entitled to possession and equitable title to the property.

The Seller holds legal title and continues to be liable for payment of any underlying mortgage.

If that describes your parents contract, then that is legal in Alabama provided it has otherwise conformed to applicable Alabama statutes. The problem that most people have with such a contract is that it is only as good as the seller's reputation for willingness to comply with its terms. In other words, when the buyer has otherwise complied with the terms of the contract, the seller might not actually convey title to the buyer forcing the buyer to seek legal redress to compel contract compliance. Sometimes, a seller can even "salt" such a contract with terms that a buyer might not be able or even know the buyer has to comply with. A maintenance clause that states the buyer must maintain the property in "like new condition" may cause an unintentional buyer default, for example. Whether such a default would hold up in court is another story.

To refinance, your parents will have to have the seller convey the property to them and pay off the existing loan balance, unless the seller has no right to prepay the debt. They'll need to check the contract.

Question (IL): What do the column headings "status comment," "terms," and "account performance" mean in a credit report?

Answer: Specific sources for credit reports vary, so we are unable to answer your question except in general terms. There are numerous credit reporting agencies out there, including the three big ones (Experian, Trans-Union, and Equifax) that basically gather data from all the smaller credit reporting agencies, evaluate, then publish the credit report to be accessed by those companies that have a consumer's permission to check that consumer's credit report. So, given the number of reporting agencies, and the fact that not all reporting agencies have exactly the same definitions for items contained in their credit reports, the answers to your question "probably" -- but there is no telling as to the exact definition, mean the following:

Status: Typically given as R-[plus a number], O-[plus a number], I-[plus a number], and M-[plus a number] meaning the Account was either a Revolving Account ("R"), Open Account ("O" and whether it was a 30, 60 or 90 day account), Installment Account ("I") and Mortgage ("M"). The numbers, mentioned in the previous sentence, are 0 - 9 with 0 meaning too new to rate; 1 meaning "Paid as agreed, Satisfactory, Current; up to 9 meaning "Charged off to bad debt."

Status Comment or "SC": Probably means the number scale we reported above, from 0 to 9; It might also mean whether the consumer or the creditor closed the account.

Terms: Probably means the amount of dollars that each payment consists of. So Terms for an M-1 Status (Mortgage, Paid as agreed, Satisfactory, Current) of 3128 means each monthly mortgage payment is $3,128.

Account performance: Probably means a summary of how the account performed over the last specified number of months the account was reviewed and the number of times the account was late by 30, 60 & 90 or more days. For example, if a Revolving Account given a status of 1 (R-1) with Terms of 255 ($255 due each month) had been reviewed for the last 85 months ("mos rev" column) and contained "0", "0", and "0" under the "Times Past Due" columns of "30+, 60+, and 90+, then that would be a good rating.

However, the best way to really understand your credit report and the exact meanings of everything in that credit report is to contact the credit reporting agency that compiled the report and speak with a consumer service representative.

Question (MA): I 'm relocating to Houston, Texas. I went to Texas to look for houses to buy. I called this real estate agent to show me a few houses. Then I found the house I want on my own, but she was present at the time also. So when I put my deposit down, the builder wrote her name on the contract as being my Realtor when I don't have any contract with her at all. Is she still considered as my agent, although I have no contract with her? Is it legal to take her name out of the purchase agreement since I don't have a contract with her?

Answer: The fact that she did not have a contract with you simply means that you were a "customer" instead of a "client."

The time to have challenged the builder's sales representative was when he placed the real estate agent's name as your Realtor on your contract. By your own admission, she was present with you when you saw the builder's house that you wanted. The fact that she was with you, and that you did not say anything to the builder as to the fact that you found the house without her help, if indeed you really did, is the reason why the builder's representative put her name down as your Realtor which, by the way, could mean that you and she had a client-agent relationship or that you only had a "customer" relationship with her.

As that is, did the Realtor aid you in finding this home and did she spend her time showing you homes? If so, you may consider that while you are not under a contract with her, she is a professional that needs to be paid for her time.

Question (NY): What is a home warranty and what are the benefits of having a home warranty contract on your home?

Answer: A "Home Warranty," referred to by many state real estate or insurance commissions as "residential service contracts," is a form of insurance policy or protection plan that is designed to remove (or at least mitigate) the risk associated with buying a previously occupied home and for new construction (usually for years 2 to 5 after many of the builder warranties terminate).

The sellers of residential service plans typically cover most built-in appliances, electrical systems, plumbing systems, water heaters, air & heat (HVAC systems), and in some instances roofs, termite treatment, washer, dryer & refrigerators -- all of which we will simply refer to as "Systems" for ease of reference. Most residential service contracts provide a menu of items covered, the deductible, any limits as to amounts of coverage, and the cost of the service contract.

The major benefit offered by a residential service contract is that if a covered System fails to perform as it was intended, the homeowner has the peace of mind knowing that after paying a small deductible, the residential service contract assumes the rest of the charges. The downside of residential service contracts is that not all items are covered, they might be subject to an inspection being performed, and the company hired to perform a specific repair must be approved by the residential service company provider. In addition, just because an item is "covered" does not mean that the residential service company will pay for the workman to perform the repair. For instance, an air-conditioning compressor may be included in the coverage offered by a residential service company, but if the compressor has exceeded its useful life the residential service company might not pay for it or may pay only a portion of the A/C Repair Contractor's fee.

Choose your favorite search engine (we used Google) and enter "home+warranty+plans" (without the quotes) in the address bar. You will find many plans offered. A real estate firm is also a source for obtaining brochures for various home warranty plans. As with any "insurance policy," read the fine print and ask questions about the coverage.