A seller sells her home for $700,000 and carries back a $150,000 note at 12% as part of the price. How does a bona fide seller-financed credit sale differ from a money loan for usury purposes?
Correct Answer
A) A seller carryback is a credit sale, which the limits treat differently
A seller who takes back paper as part of the purchase price is extending credit on a sale rather than lending money, and the time-price doctrine has long treated that differently from a loan. Other choices: the flat ceiling answer ignores the doctrine; a broker arrangement is a separate exemption that is not needed here; and the buyer's purpose does not settle it. Source: California time-price doctrine; seller carryback
Why This Is the Correct Answer
A seller who takes back paper as part of the purchase price is extending credit on a sale rather than lending money, and the time-price doctrine has long treated that differently from a loan. Other choices: the flat ceiling answer ignores the doctrine; a broker arrangement is a separate exemption that is not needed here; and the buyer's purpose does not settle it. Source: California time-price doctrine; seller carryback
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