Seller financing on a Miami home sale in 2026

Last updated: August 2026

Seller financing means you sell your Miami home and act as the lender for part or all of the price. The buyer signs a promissory note, you record a mortgage, and you collect payments over time instead of one wire at closing. In Florida, use a purchase-money mortgage and note: the buyer takes title, you hold a recorded lien. The alternative, an agreement for deed, where you keep title until the buyer pays in full, is riskier than it sounds. Florida Statute 697.01 deems an instrument given to secure payment of money a mortgage, subject to the same rules of foreclosure [5], so the clean forfeiture sellers imagine generally is not available.

Sellers carry paper to spread gain recognition under the installment method of IRC 453, to earn interest, to widen the buyer pool, and to move a property lenders will not finance, which in Miami in 2026 usually means a condo. The risks are default, a slow judicial foreclosure, lien priority behind an existing mortgage, and a federal rulebook most sellers have never read.

The two structures, and why only one is worth doing

Purchase-money mortgage and note

Title transfers at closing. You get a note setting rate, term, amortization, late charges and default terms, plus a recorded Miami-Dade mortgage. If the buyer stops paying you foreclose that lien, and subject to the court's discretion you may pursue a deficiency under Florida Statute 702.06 [6].

Agreement for deed, also called contract for deed

You keep legal title, the buyer pays over time, and the deed transfers only at payoff. It feels like a lease with an exit. It is not. Under 697.01 these are treated as security instruments [5], so once a court characterizes yours as a mortgage you are foreclosing anyway, while holding title to a property occupied by someone you cannot easily remove.

The CFPB issued an advisory opinion in August 2024 treating contracts for deed as credit under the Truth in Lending Act, then withdrew it effective May 12, 2025 [7]. That removes the agency's reading, not the statute. Whether TILA reaches a given contract for deed is fact-specific, and belongs with a Florida real estate attorney before you sign.

Why a Miami seller would consider carrying paper

The condo financing gap

In July 2026, existing Miami-Dade condos sat at 12 months of supply while single-family homes sat at 4.8 months [1]. Much of that spread is financing. Fannie Mae's Lender Letter LL-2026-03 retires the streamlined Limited Review path for established condo projects for applications dated on or after August 3, 2026, sending more projects through Full Review of budget, reserves, insurance, delinquencies and inspection reports [2]. A project that fails is non-warrantable, and such a unit has a thin buyer pool: cash, portfolio lenders, or you, including in condo-heavy submarkets like Brickell.

Spreading gain recognition

Under the installment method you report gain as payments arrive, applying a gross profit percentage to the principal portion of each payment. Interest is separate ordinary income. Two limits catch sellers off guard: depreciation recapture is reported in the year of sale whether or not you collected a payment, and dealer dispositions cannot use the method at all [8]. IRC 453A adds an interest charge on deferred tax when the sale price exceeds $150,000 and the face amount of installment obligations outstanding at year end exceeds $5,000,000 [3]. You can also elect out; ask a CPA first.

The risks you are actually taking

Florida foreclosure is judicial and slow

Florida Statute 702.01 provides that all mortgages shall be foreclosed in equity [6]. No power of sale, no trustee: you file suit, record a lis pendens, serve the borrower and litigate. Section 702.10 can speed an uncontested case, but a contested one moves at the pace of the docket while taxes, insurance and assessments accrue against an asset you do not control.

Lien priority

An existing mortgage stays first until paid. A note behind it is junior, and if the first-position lender forecloses, a junior lien can be extinguished at the sale. Tax and association liens sit there too.

Your own loan and the due-on-sale clause

The Garn-St Germain Act, 12 U.S.C. 1701j-3, generally permits a lender to enforce a due-on-sale clause, with protected transfers in subsection (d) covering death, spouse or child transfers, divorce and certain inter vivos trusts [9]. A sale to a third-party buyer with seller financing is not on that list, and subject-to deals leave you personally liable on a note you no longer control.

The federal overlay that surprises sellers

Dodd-Frank added a loan originator definition to the Truth in Lending Act, implemented by Regulation Z at 12 CFR 1026.36. Two narrow seller-financing exclusions sit there, and they are the most garbled item in coverage of this topic [4].

Three or fewer properties, 1026.36(a)(4). Available to a person as defined in the rule, which can include an entity. The person must provide seller financing for three or fewer properties in any 12-month period, own each property and take it as security, and must not have constructed or acted as contractor for construction of a residence on the property in the ordinary course of business. The financing must be fully amortizing, must be financing for which the person determines in good faith that the consumer has a reasonable ability to repay, and must carry a fixed rate or a rate adjustable only after five or more years, subject to reasonable annual and lifetime limits on increases.

One property, 1026.36(a)(5). Available only to a natural person, estate, or trust. Same ownership and construction conditions, one property in any 12-month period, but the financing test differs: the repayment schedule must not result in negative amortization, and the rate must be fixed or adjustable only after five or more years with the same reasonable caps.

Note the direction, because this is where the internet gets it backwards. The three-property exclusion is the stricter one on loan terms: full amortization, leaving no room for a balloon, plus an express good-faith ability-to-repay determination. The one-property exclusion bars only negative amortization, so a balloon can fit within it, and carries no express ability-to-repay condition, but it is capped at one property and is not available to an LLC.

Sitting outside the loan originator definition is not a blanket exemption. Ability-to-repay obligations under 1026.43 attach to creditors, and whether you are one turns partly on how often you extend dwelling-secured consumer credit. Whether the deal is consumer credit at all depends on the buyer's purpose. All of it is fact-specific, so take it to a Florida attorney with consumer finance experience.

SAFE Act and Florida licensing

The SAFE Act pushed originator licensing to the states, and Florida's regime is Chapter 494. Section 494.00115 exempts, among others, an individual who makes or acquires a mortgage loan with his or her own funds for his or her own investment and who does not hold himself or herself out to the public as being in the mortgage lending business [10]. Every clause there is load-bearing.

Documentation, cost and servicing

Florida taxes the paper. Documentary stamp tax on a promissory note runs 35 cents per $100 financed, capped at $2,450 [11], and a note secured by a Florida mortgage also draws the nonrecurring intangible tax of 2 mills per dollar [12]. Also plan on a title policy, tax and insurance escrow, windstorm coverage naming you as mortgagee, a condo estoppel review, and clear default and cure language. A licensed servicer applies payments correctly and builds the payment history a foreclosure court wants to see.

If the note has a balloon, say so in writing in the purchase contract. Florida Statute 697.05 requires a balloon legend on certain mortgages, and omitting it automatically extends the maturity date, which is to say the balloon disappears. The statute exempts first mortgages, terms of five years or more, and seller-financed mortgages where a written purchase agreement provides for a larger final payment [13]. Whether your deal lands inside those exemptions is a drafting question for counsel.

How to price the note

Start with the alternative. A buyer who could get a conventional loan would pay whatever the market charges, so check the Freddie Mac Primary Mortgage Market Survey rather than a figure printed in any article [14]. Price above it: you are taking risk a bank declined, with a slower remedy.

Down payment. The best predictor of whether a note performs: equity is what makes a buyer fight to keep the property.

Rate. Illustration only, not a quote and not an offer of credit: at an illustrative 6 percent, a $600,000 balance accrues about $36,000 of interest a year while outstanding. Your rate should reflect the buyer's profile, the down payment and the property's financeability.

Term, amortization and escrow. A shorter balloon cuts exposure but concentrates refinance risk on one date; if the building is still non-warrantable then, the buyer may have no way to take you out. Escrow keeps unpaid taxes and lapsed insurance from becoming your problem.

Before committing, get a read on what a straight sale would bring with a listing valuation, then run the structure past your CPA and attorney and start here.

Frequently asked questions

Can I carry a note if I still have a mortgage on the property?

Only with care. Your lender's lien stays first until paid, any note you carry is junior, and your loan almost certainly has a due-on-sale clause the lender may enforce on a sale to a third party [9]. Some sellers instead carry a small second behind a new first the buyer obtains; have an attorney review your loan documents first.

Does carrying paper make me a mortgage lender?

Not automatically, but the question is real. Regulation Z 1026.36 has narrow exclusions from the loan originator definition at one property and at three properties in any 12-month period, each with different conditions on amortization, rate and ability to repay [4], and Florida's Chapter 494 exempts an individual lending his or her own funds for his or her own investment [10]. The analysis is fact-specific and belongs with counsel.

Will I still owe tax in the year I sell?

Usually some. The installment method spreads gain across the years you receive payments, but depreciation recapture is reported in the year of sale regardless of what you collected [8]. Ask a CPA about the 453A charge described above [3].

Gabriel

Sources

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Gabriel A. Moyers, PA. eXp Realty. Florida License #3407280. Equal Housing Opportunity. This article is general information as of August 2026 and is not legal, tax, or financial advice. Verify current figures against authoritative sources before acting.