Posted by Michael Morrongiello on June 26, 2001 at 18:46:11:
Todd:
A land contract is like buying or selling a property under a “lay away” plan. If you buy a property under a land contract (agreement for deed, contract for deed,or some other type of installment purchase, etc.) The LEGAL TITLE or ownership of the property stays in name of the seller UNTIL such time that you have fufilled all of the terms and obligations involved in the Land Contract. Then the seller is suppose to deliver LEGAL TITLE to you. This is an area of potential concern if you are buying under a land contract arrangement- how can you be certain to obtain legal title. Also Land Contracts are used as a means to allow a seller or buyer to attempt to circumvent any due on sale clause that might exist in existing financing a property you wish to buy or sell. It is not a foolproof way, but often if the arrangement is to be short term, it can be an effective way to get around the “DOS” due on sale clause…
Many investors like to SELL their properties using a land contract arrangement so that the LEGAL TITLE remains in their names and cannot be easily “clouded” by a buyer who might have judgements, liens, etc. surrounding him/her. Some jurisdications do not require a formal drawn out and expensive “judicial” foreclosure process if you need to enforce the default provisions under a land contract, however many States are now requiring this type of instrument be foreclosed similar to a mortgage instrument.
As for PRO BUYER real estate contracts, you should always be on the lookout for favorable clauses that you can use when “customizing” a contract. Check out Bill Bronchick’s site and www.legalwiz.com and some of his forms among others for ideas, clauses, contracts, etc.
Best of luck and happy hunting,
Michael Morrongiello