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  • July 30, 2007 at 12:46 PM #9646
    former SoCal
    Participant

    I saw this on several real estate listings, what does it mean? Thanks

    July 30, 2007 at 1:46 PM #68730
    NotCranky
    Participant

    A land contract is like a lease with an option to buy. There may be a down payment and other terms involved. The seller collects funds according to the terms and handles payments for loans on the property. It could be any of several real estate types. This might also be advertised as “rent to own” although that vernacular could be used to describe any number of arrangements. A RE lawyer or someone with much experience should advocate for the buyer on this type of deal.

    July 30, 2007 at 1:46 PM #68800
    NotCranky
    Participant

    A land contract is like a lease with an option to buy. There may be a down payment and other terms involved. The seller collects funds according to the terms and handles payments for loans on the property. It could be any of several real estate types. This might also be advertised as “rent to own” although that vernacular could be used to describe any number of arrangements. A RE lawyer or someone with much experience should advocate for the buyer on this type of deal.

    July 30, 2007 at 1:51 PM #68732
    SD Realtor
    Participant

    Land Contracts used to be more popular in the 70’s and even in the 80’s then as financing standards got soft, they fell off considerably. Expect them to come back as the credit market tightens up.

    Basically the buyer and seller enter into a contract that states that the seller shall transfer ownership of the property to the buyer after the buyer has fully paid the seller the agreed price per the terms of the contract. The buyer/seller can work out whatever terms they want regarding the downpayment, interest rate, etc… As you can see there are many potential advantages for both parties. There are also tremendous pitfalls… During the terms of the contract the buyer holds legal possession and occupies the property and the transfer of the property is NOT made until the full price has been received.

    Now if the buyer misses any payment under the land contract, he may lose the property AND the seller may keep the money paid up to that point as rent! Different states have different laws regarding this issue.

    Also a buyer may be in trouble if the seller gets foreclosed on. In that case the buyer may be obligated to pay off the mortgage in the case of a seller default.

    Of course my post here is quite vague. I would encourage anyone who is getting involved with a land contract to run as fast as possible to a good strong real estate attorney.

    SD Realtor

    July 30, 2007 at 1:51 PM #68802
    SD Realtor
    Participant

    Land Contracts used to be more popular in the 70’s and even in the 80’s then as financing standards got soft, they fell off considerably. Expect them to come back as the credit market tightens up.

    Basically the buyer and seller enter into a contract that states that the seller shall transfer ownership of the property to the buyer after the buyer has fully paid the seller the agreed price per the terms of the contract. The buyer/seller can work out whatever terms they want regarding the downpayment, interest rate, etc… As you can see there are many potential advantages for both parties. There are also tremendous pitfalls… During the terms of the contract the buyer holds legal possession and occupies the property and the transfer of the property is NOT made until the full price has been received.

    Now if the buyer misses any payment under the land contract, he may lose the property AND the seller may keep the money paid up to that point as rent! Different states have different laws regarding this issue.

    Also a buyer may be in trouble if the seller gets foreclosed on. In that case the buyer may be obligated to pay off the mortgage in the case of a seller default.

    Of course my post here is quite vague. I would encourage anyone who is getting involved with a land contract to run as fast as possible to a good strong real estate attorney.

    SD Realtor

    July 30, 2007 at 4:28 PM #68765
    former SoCal
    Participant

    Former Socal
    Thanks for the info. I think I’ll stay away from those, sounds risky.

    July 30, 2007 at 4:28 PM #68834
    former SoCal
    Participant

    Former Socal
    Thanks for the info. I think I’ll stay away from those, sounds risky.

    July 30, 2007 at 4:28 PM #68767
    former SoCal
    Participant

    Former Socal
    Thanks for the info. I think I’ll stay away from those, sounds risky.

    July 30, 2007 at 4:28 PM #68836
    former SoCal
    Participant

    Former Socal
    Thanks for the info. I think I’ll stay away from those, sounds risky.

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