A property agreement is defined as an agreement between at least two parties where one party is referred to as the creditor or seller and one party is referred to as the buyer, purchaser, or debtor. The property agreement is a written agreement between a seller and a buyer in which the seller agrees to sell a specified piece of property and the buyer agrees to purchase the specified piece of property according to the terms found in the property agreement.
Property agreements created with real estate may be more commonly referred to as a mortgage or real estate contract, contract for deed, or deed of trust. Property agreements created with personal property such as crops or inventory, etc. may be referred to as chattel mortgages.
Staff will request a copy of the complete finalized agreement along with verification of actual ownership of the property itself, which will include:
- the plan for repayment
- a copy of the amortization schedule showing:
- The full schedule of payments
- Complete breakdown of each payment showing the separate portions paid to principal and interest
- the starting balance
- payments received
- the current balance
NOTE: If there is no legal restriction against converting the agreement into cash, transferring or selling it, the agreement is considered negotiable. Assume, absent evidence to the contrary, the written agreement is negotiable.
Determining the Resource Value of Property Agreements:
- If the participant/applicant is the seller/creditor:
- The bona fide property agreement is a countable resource, but the property itself is not a resource as it cannot be legally converted to cash while it is encumbered by the agreement
- The resource value of the bona fide property agreement is its outstanding balance owed unless the individual provides verification of a lower market value or legal bar against the sale of the agreement
NOTE: A property agreement that is not bona fide is not a resource because it is not enforceable under Missouri law.
- If the property itself has not changed hands, the property is still considered a resource owned by the seller; however may be inaccessible if it is encumbered by the property agreement.
- If the participant/applicant is the buyer/debtor:
- The property agreement is not considered the buyer’s resource
- The property purchased becomes the buyer’s resource but only when the property legally changes hands