Land Contracts are common throughout the United States. In some states, they are called Trust Deeds, Contract for Deed, Deeds of Trust, Home Notes, or Privately Held Mortgages. Regardless of the name used, they all represent the same thing: a way of selling property where the buyer "borrows" from or relies upon the seller for the financing, rather than paying cash up front or borrowing from a bank.
The seller and buyer enter into a contract that normally states that the seller shall transfer ownership of the property to the buyer after he or she has fully paid the seller the agreed upon purchase price. In most cases, the contract requires the buyer to make a very modest down payment and then make monthly payments over time. Most land contracts require the buyer to pay the seller interest on the money owed (just like a bank would collect). The contract can reflect various agreed upon terms including down payment amount, interest rate, a balloon term or lump sum payment to pay the balance of the purchase price for the property.
During the term of the land contract (i.e. while the contract is in force and effect, the buyer is not in default, and until all of the payments are made), the buyer holds legal possession of and occupies the property. The land contract can call for transfer of the property once the seller has received all of the required payments, or can call for the transfer at some time sooner with the seller then holding a mortgage on the property to ensure that the balance of the purchase price will be paid in full.
Whatever the terms agreed upon for transferring ownership, when the agreed upon transfer date is reached, the seller tenders (or gives) a deed to the property to the buyer who then records the deed in the county recorder's office or real property office of the county where the property is located.
Source: Standard Legal Law Library
The above information is a basic explanation of a land contract and does not reflect specific content contained in an actual contract. All details to be disclosed upon closing. It is our policy at Doyon Properties LLC to record a Memorandum of Land Contract with the appropriate registry of deeds to ensure all land contracts are legally registered and recorded.
Doyon Properties LLC is a property sales and management company owned and operated by professional real estate investors, Kyle Doyon - Broker, and partners. The properties we manage are owned by the investment companies we work with. Bringing you the benefit of wholesale, commercial, and residential properties and even land contract home ownership.
The Doyon Family has been in the real estate business for over 30 years. We have various backgrounds in construction management, Realty, residential building & development.
Our family looks forward to working with you in pursuing home ownership!
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So, what is a land contract? See below!