Land Contract Definition

Combines features from a Sales Contract, a warranty deed, and a mortgage.

Includes the sale of vacant land

*We recommend you visit the loan administration home page for details regarding our software. Here are some facts about this type of contract.

Now handles up to forty year loans!

...The most important feature of an agreement like this is the Seller does not deliver the deed to the Buyer at closing...Rather some future date. When the contract is fulfilled, the Seller, or Vendor, gives the Buyer, or Vendee, the deed.

...The widest use of an Installment Contract occurs when the Buyer does not have the full purchase price in cash or is unable to borrow it from a lender.

...Historically, a Conditional Sales Contract was used to sell vacant property, or land, where the Buyer put modest amounts of money down and the Seller agreed to receive the balance as installment payments.

...it is a common practice today to require the Seller to place the deed, in an escrow at the time the contract is made...Additionally, an astute Buyer will require that a collection account be used to collect the Buyer's payments...This is done using a neutral third party ...The Seller may insist that the Buyer place one-twelfth of the annual property taxes and hazard insurance in the escrow account each month to pay for these items...The Buyer will want to record the contract to establish the Buyer's rights to the property.

...If a Land Contract agreement is used for the purchase, or sale, of real estate, it should be done with the help of legal consul...

...When the final payment is made to the Seller (or the property refinanced through an institutional lender), title is conveyed to the Buyer.

Most of this information found in: Real Estate Principals, Seventh Edition, Charles J. Jacobs and Bruce Harwood.

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