Typically, residential real estate transactions are thought of in one way: a buyer and a seller work through a realtor and a bank or mortgage broker to complete a sale with a single transaction and a one-time payment to the seller. But there is another non-traditional option for the sale of real estate that is becoming more common every day: it's called a Land Contract.
A Land Contract allows the owner of a property to sell that property to a buyer over the course of time, financing the purchase price on behalf of the buyer and collecting interest on the sale amount. The buyer does not need to go out and find a mortgage from a bank or mortgage company, nor does the buyer have to pay the entire purchase price to the seller upfront. Rather, the buyer signs a Land Contract with the seller agreeing to purchase the property in either installment payments or in installment payments with a balloon payment on a certain date. The buyer then moves into the property and makes the agreed upon monthly payments. When all of the payments (and any required balloon payments) are made according to the terms of the Land Contract, only then does the buyer finally take title of the property from the seller.
A Land Contract gives a buyer who may have a difficult time finding bank financing due to credit problems or non-traditional income sources the opportunity to purchase a home. It's a great way for a buyer to break free from "rent payments" and build equity in a property.
A Land Contract allows sellers to make additional money on the financing of the sale of a property, collecting not only the purchase amount but also the interest on the principal that is generated over time. Plus, the seller maintains title to the property until all of the payments are made, thereby allowing the seller to keep control of the property and use its equity. If the buyer misses any payments to the seller, the seller keeps the previous payments made on the Land Contract as rental income, and the option for the transfer of property to the buyer is lost.
Below are some Land Contract products and services examined by the American Legal Review:
If you wish to sell a piece of real estate you own and are willing to finance it on behalf of the buyer, then you need to create a Land Contract. Standard Legal offers a comprehensive legal forms software package to create the following Land Contract forms:
- A Land Contract utilizing a down payment with monthly payments thereafter in order to pay the purchase price;
- A Land Contract utilizing a down payment, with monthly payments thereafter and then a balloon payment at a later date in order to pay the purchase price;
- a Memorandum of Land Contract that can be filed with your local recorders office (when applicable);
- a Land Contract for Vacant Land, for property that has no dwelling on it and is undeveloped;.
- Property Disclosure Forms, many of them state-specific, required for nearly all real estate transactions;
- Termination of Land Contract, used when the purchasing party defaults on the contract as a way to reclaim clear title.
- Plus BONUS SOFTWARE: a Mortgage Payment Calculator with Amortization Schedule! Use this bonus software to determine the amount of payment to be made on the financing, and what portion is principal vs. interest.
LEARN MORE: LAND CONTRACT SOFTWARE FROM STANDARD LEGAL
A Contract for Deed (also know as a Land Contract, Agreement for Deed, Contract Sale or Real Estate Installment Agreement) allows the Seller to retain the title to the property and agree to transfer the title to the Buyer once all the payments under the Agreement are made and all other obligations are met. In essence, the Seller finances the purchase and holds the title or deed as security. When the Buyer completes the required payments, the Seller must deliver valid legal title by way of a deed. During the period of the contract, the Buyer makes installment payments on the purchase price and is entitled to possession and equitable title to the property. The Seller holds legal title and continues to be liable for payment of any underlying mortgage.
This package contains (1) Instructions and Checklist for Contract for Deed; (2) Information about Contract for Deed; (3) Contract for Deed; (4) Disclosure Of Information On Lead-Based Paint and/or Lead-Based Paint Hazards.
The forms can be downloaded and accessed immediately and you will then be able to edit and use them as often as you like. Naturally, all our forms come with our 100% money back guarantee.
A Contract for Deed or Land Contract (also known as a Land Installment Contract, a Conditional Sales Agreement or an Installment Sale Agreement) is a contract between a seller and buyer of real property, where the seller provides the financing. The seller retains the legal title to the property while permitting the buyer to take possession of the property. When the buyer has paid the full purchase price plus any interest back to the seller, the buyer receives the legal title to the property.
Law Depot's Land Contract is ideal for buyers and sellers who want to save time and money by drafting their own high quality documents. It can be used to quickly and easily outline purchase price, down payment, interest rate, and more.
Contracts for Deed (also called Land Contracts) are used as a form of owner financing of real estate. An owner and a buyer enter into a contract in which the owner agrees to give the buyer a deed after the buyer pays the owner a certain amount of money. Usually the contract requires the buyer to make payments over time with interest payable on the unpaid balance. After the buyer pays all of the payments called for under the contract, the owner gives the buyer a deed to the property. During the term of the contract for deed, the buyer is entitled to possession of the real estate and may be required to keep the property insured and pay the real estate taxes, or reimburse the Seller for same.
Creating a valid Land Contract can be a complicated legal process. There are often a significant number of legal forms to prepare and file. If you come to the decision that you cannot handle the paperwork and required legal filings, then you need to find the best local attorney you can to help you.
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