Re: Land Contracts - Posted by JohnBoy
Posted by JohnBoy on June 20, 2001 at 09:44:41:
First of all, there is NO mortgage. It’s just a contract. As far as whether or not you will need to foreclose vs. evict in the event of the buyer defaulting, it depends on your state laws and how the contract for deed is structured.
In my state, IL., if the buyer has 20% or more in equity AND the contract for deed is for 5 years or longer, then we must foreclose if they default. If the buyer has less than 20% in equity AND the contract for deed is less than 5 years, then we can evict them as a tenant. Of course you must still serve proper notice and if the buyer fails to cure the default, then we record a quit claim deed that we had the buyer sign over to us that is held in escrow. After we record the quit claim deed the buyer loses all their interest in the property as an owner with equitable title and then we file for eviction.
Every state has different laws pertaining to contract for deeds, so you need to check and see what the statue reads in your state.