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Land Contract FAQs

What is a land contract?

A land contract, also called a land installment contract or a contract for deed, is a method of buying and selling real estate that has been around for hundreds of years.

In a land contract, the buyer and the property owner agree to a certain price, down payment, and monthly payments for a certain period of time. Under the land contract, you have all the rights and responsibilities of an owner, including the right to make changes to the property, the right to deduct the interest paid and real estate taxes from your income at tax time (check with your tax preparer to see if this would be an advantage for you), the right to rent or sell the property, and the right to occupy the property, if you choose.

When will I get the deed to the property?

You get the actual deed to the property when you make your final payment.

How do I know the owner will give the the deed? What if something happens to the owner?

Your land contract will be recorded at the County Recorder’s office, proving your interest in the property, proving the owner agreed to give you the deed at the conclusion of the payment agreement, and proving that you have legal interest in the property even if something happens to the owner. Be careful though: not all owners who sell via land contract agreement will record your agreement with the County Recorder, even though it’s required by law. Without this recorded agreement, you may have a hard time proving that you have any rights to the property.

Can I pay off the property early?

Absolutely, and there is no penalty for prepayment.

Can my payments change?

Your interest rate is fixed for the entire term of the agreement. The only way your payments can change is if: * You make your payments late, in which case there will be a late fee assessed along with any court costs * The county raises or lowers the taxes on your property * The insurance company raises or lowers the insurance premium on your property * You make a higher down payment, in which case your payments will go down

Can I have an attorney review the documents before I sign them?

Absolutely, and if you do not understand the documents, we encourage this.

Can I arrange for my own insurance?

Yes. The insurance included in your monthly payment has a high deductible, meaning that it will not cover the first $2,500 in damage to the property. In addition, it does not cover your contents, meaning that if you live in the property and it is damaged by a fire, your furniture, electronics, and so on are NOT covered.

If you choose to secure your own insurance (which we recommend) your monthly payment will be reduced by the amount of the insurance we carry on the property. You will need to name our company as loss payee and have your insurance agent send us a copy of the paid policy.

Will to owner perform maintenance on the property?

No. The reason the price and payments are so affordable is that the property needs improvements, and you, as the buyer, are agreeing to do that work. If you know how to make improvements to this property and have the necessary resources, this could be a really good—maybe even life-changing—deal for you. If you can’t, this may not be the best option for you.

Can I rent the property to someone else?

Yes. As the “equitable owner” in a land contract, you have the right to lease the property to someone else, and to keep any difference between the rent you receive and the payments you make to us (less any expenses on the rental itself).

We’ll even help. We are happy to assist by providing you with leases, sample ads for tenants, applications, and other forms and contracts you will need to be a successful landlord. In fact, we can even recommend a property manager if you do not want to manage the property yourself.

Can I sell the property before the end of the land contract?

Yes. If you choose to renovate and resell the property, you can do so, as long as you pay off the remaining balance of your land contract. Any additional profit is all yours.

Can I get inspections or an appraisal?

Yes. In fact, if you are unsure about the value of the property, or the condition of any of the systems, we recommend it. This will be at your expense.

What do I have to do to qualify?

We can fax or email you an application, or you can pick it up at our office. It is easy to qualify: we care very little about your credit. The questions we ask:

  • Do you have the proven skills and ability to do the work or get it done?
  • Do you have the verifiable income to make the payments? (3 to 4 times the monthly payment)?
  • What do we find when performing a background check?
  • Have you been a good tenant in the past (Do you have evictions or broken a lease)?

How quickly will I need to close?

Once you are approved, you should be prepared to close quickly. Our owner-financed opportunities are popular and we are unable to hold propertied for people without a down payment and signed agreement.

I Want to Buy a House with Owner Financing! What Do I Do Now?

Our website has the most current list of available homes. Once you want to scehdule a viewing call Scott at (513) 899-1112 to set up a time to see your next home.