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Handling Payments on a Wrap in Colorado

This article discuss handling payments on a wrap sale in Colorado.

A common question that often comes up is how payments are handled on a wraparound or “wrap” installment land contract in Colorado.

Theoretically, the buyer pays the seller, and the seller pays his underlying lender. ¬†However, what if the seller decides not to pay the underlying loan and just pocket the buyer’s money?

As a protection for the buyer, a third-party escrow company can be used to collect payments from the buyer, make the underlying payments, then send statements to the parties.  The escrow company would handle the annual accounting, 1098, etc.

If the underlying loan does not have an escrow for taxes and insurance, the escrow company can handle that, too.

For a recommendation of escrow companies in Colorado for a land contract or “wrap” transaction, please contact us at 303-398-7032.

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