What Is A Land Contract Agreement

A land contract is a form of seller financing.

What is a land contract agreement.

The land contract is its own legal agreement or contract with all the terms and conditions agreed to between the buyer and seller. A land contract is a written legal contract or agreement used to purchase real estate such as vacant land a house an apartment building a commercial building or other real property. Land contract agreements must cover myriad issues such as what happens if the market appreciates or depreciates dramatically prior to the due date of the balloon payment. For example both parties might settle on a five year land contract with a balloon payment at the end.

A land contract often described by other terminology listed below is a contract between the buyer and seller of real property in which the seller provides the buyer financing in the purchase and the buyer repays the resulting loan in installments under a land contract the seller retains the legal title to the property while permitting the buyer to take possession of it for most. A land contract form also known as a contract for deed may be a legally binding document between the seller and buyer of some sort of property such as a house. It is similar to a mortgage but rather than borrowing money from a lender or bank to buy real estate the. Land contract terms can vary greatly from one or two years up to 30 year terms like traditional mortgages.

Land contracts for buying homes were very popular in the late 1970s and early 1980s. Ultimately the seller and buyer agree on the contract length. With a land contract form the seller agrees to accept payments for the property from the buyer. An agreement between a buyer and seller of property in which the buyer makes payments toward full ownership as with a mortgage but in a land contract the title or deed is held.

In a land contract a seller can earn a proper selling price for the real estate without the added costs of closing. At a minimum a land contract should list the address of the real estate and the full legal description of the property the purchase price down payment amount the monthly payment amounts and term number of. Back then installment sale contracts sometimes called contracts for deed offered more attractive financing terms over the higher rates and rigid qualification standards of institutional lenders. Once the loan for the property is paid off the seller transfers the title of the deed.