Buying or selling property is one of the biggest financial transactions most people will ever make. While traditional mortgage lending is the most common path, there are times when owner financing agreements—sometimes called seller financing—make sense for both buyers and sellers. These arrangements can open doors to homeownership or investment opportunities, but they must be carefully structured to comply with Tennessee law.
At Champagne Law Firm, with offices in Sevierville, Nashville, and Rogersville, we help clients across East and Middle Tennessee navigate the legal and financial details of owner financing agreements to protect their interests.
What Is an Owner Financing Agreement?
An owner financing agreement is when the property seller acts as the lender, allowing the buyer to make payments directly to them instead of obtaining a traditional mortgage from a bank or credit union. The terms are negotiated between the buyer and seller and typically include:
- Purchase Price – Total agreed-upon cost of the property.
- Down Payment – An upfront payment made by the buyer.
- Interest Rate – Agreed rate applied to the financed balance.
- Payment Terms – Monthly payments, length of the loan, and whether there is a balloon payment.
- Default Remedies – What happens if the buyer misses payments.
Benefits of Owner Financing
For buyers:
- Provides an option when traditional mortgage approval is difficult.
- May involve fewer closing costs and faster transactions.
- Creates flexibility in structuring payments.
For sellers:
- Expands the pool of potential buyers.
- Generates steady income through interest payments.
- Can allow for quicker sales, especially in unique or rural properties.
Risks and Challenges
Owner financing can also carry risks if not properly drafted or reviewed. Common pitfalls include:
- Improper Documentation – Without a written, legally enforceable contract, both parties are vulnerable.
- Unclear Default Provisions – Sellers may face challenges reclaiming the property if payments are missed.
- Regulatory Compliance – Tennessee and federal lending laws may apply, depending on the structure of the deal.
- Balloon Payments – Buyers may struggle to refinance or pay off large balances when the balloon payment is due.
Owner Financing in Tennessee Real Estate
In Tennessee, owner financing must comply with contract law and property transfer requirements under Tennessee Code Annotated Title 66 – Property. Depending on the agreement, documents such as a promissory note, deed of trust, or land contract may be required to secure the transaction. Clear terms help protect both sides and prevent future disputes.
How Champagne Law Firm Can Help
At Champagne Law Firm, we help clients across Sevierville, Gatlinburg, Pigeon Forge, Nashville, Morristown, Dandridge, Jefferson City, Newport, Maryville, Townsend, and beyond with owner financing agreements by:
- Drafting clear and enforceable contracts
- Reviewing agreements to ensure compliance with Tennessee law
- Protecting sellers’ rights in the event of buyer default
- Advising buyers on their obligations and rights under the agreement
With experience in both property law and financial matters, we ensure these transactions are structured to safeguard your long-term interests.
Contact Us
If you are considering buying or selling property using owner financing in Tennessee, legal guidance is essential to avoid costly mistakes.
Contact Champagne Law Firm today at 865-228-8080 or reach out online to schedule a confidential consultation with an attorney who understands the complexities of owner financing agreements.
