When attempting to sell a house, a land contract could give you greater freedom. These agreements are between the buyer of the property and you, the seller. You, the seller, offer the financing for the buyer, who consents to pay back the loan in a series of installments equal to the amount of the home’s purchase price. Buyers who are not qualified for conventional financing from a bank or mortgage firm can nonetheless purchase a property through land contracts. Michigan land contract attorneys can handle every step of drafting your land contract, including recording the necessary documents with the Register of Deeds in Ingham County and the neighboring towns. Our real estate broker with a license, can assist with the creation of your land contract.
LAND CONTRACTS IN MICHIGAN: HOW DO THEY WORK?
The precise conditions of the land contract must be drafted whenever a buyer consents to accepting one for a particular piece of property. The contract will provide that a deed be created. A warranty deed is the kind of deed that is commonly written. Following the final payment that covers the entire purchase price, the deed will specify how the property will be transferred from the seller to the buyer.
The steps in a Michigan land contract are as follows:
- The majority of land contracts call for a down payment of 10% or more of the purchase price from the buyer.
- The vendor will then be required to pay in installments over a predetermined length of time. Although the durations can differ, most contracts last between two and four years.
- The buyer will typically have a balloon payment due at the conclusion of the period before the last deed to the property is transferred.
Land contracts have a number of benefits, including:
By allowing buyers to have land contracts, you might be able to sell your property more quickly. The contract’s terms are intended to be reasonable for the buyer, and as the seller, you can decide what those conditions will be.
As the seller, you will benefit tax-wise by collecting the proceeds of the sale in installments as opposed to one lump sum. As opposed to having to be claimed within a single tax year, the proceeds from the sale will be dispersed over a number of years.
You will receive consistent income through the monthly payments, and thanks to the interest you will earn on the deal, you might even end up with more money than you would have with a conventional sale.
If the seller doesn’t pay, you can take legal action to recover the item and sell it again after 90 days through forfeiture.
The following are a few drawbacks of land contracts:
You can start the forfeiture process to regain ownership of the property once the buyer is behind on payments. However, the buyer has until day 89 to make up payments, which might cost you up to three months’ worth of rental income.
You have no other remedies to pursue the buyer for recourse of loss payments on the property if the property enters forfeiture in Michigan. You will get your property back, and the buyer won’t have to shell out any more cash to fix any problems with it.
We can assist you in deciding if a land contract is the right course of action while serving as your land contract lawyers. To assist you in choosing the best course of action for your property sale, we will sit down and go through all the benefits and drawbacks of this option.
ADVICE ON LAND CONTRACTS FOR YOUR PROPERTY SALE
You can get support from our knowledgeable legal counsel while you create a land contract for the sale of your property. Land contracts are frequently excellent alternatives for purchasers and sellers of real estate when a conventional mortgage is not an option.
We can also assist if you need to file a lawsuit against a party with whom you already have a land contract for a property that already exists. When something goes wrong with a land deal, we may assist you in filing the appropriate documents to begin the forfeiture procedure for the property.
