The land contract is its own legal agreement or contract, with all the terms and conditions agreed to between the buyer and seller. At a minimum, a land contract should list the address of the real estate and the full legal description of the property, the purchase price, down payment amount, the monthly payment amounts and term, number of payments to be made, and any balloon payment required. Attaching an amortization schedule to show the exact payoff schedule of applying the monthly payments to the total purchase price is helpful.
The first thing you must do when you have signed a contract to buy a property, especially where there are professionals involved in representing the interests of either party, is to lodge a caveat to protect your interest in the property until settlement. A caveat will stop the vendor from selling to someone else or encumbering the property without notice to you.
Hi Seth, and thanks for the quick response! I’ve looked at the steps you’ve outlined, and, other than a few required disclosures when selling a house, the steps seem the same to me. I’m just not willing to pay a third party 2300 bucks to close a cash deal on a 54k property. It’s just not right that I can go pay cash for a 54k car, but somebody else’s hands have to be in the pot when I buy a 54k house for cash! Arghh! I’m going to buy title insurance because the owner is in bankruptcy, but I really don’t see anything else that I can’t do by myself. I’m waiting on a couple of quotes from different title companies, but I’ll likely buy your package and go from there. Even if it doesn’t work out for this deal, I’m sure I’ll be able to use the info on future land only deals!
If you have chosen to sell your land privately, then you need to know that there are several ways that you can advertise your property. The absolute easiest way is to put out a ‘For Sale By Owner’ sign. This might give you better results than you expect. Many people searching for land simply get in their cars and drive around looking for a for sale sign. Make sure that you have some contact information on your sign.
As with other real estate transactions, land contracts require a “closing” to prepare, sign, and file all necessary legal documents. This article discusses the common steps a buyer and seller should take to close on a land contract purchase. For information on land contracts in general, see the Nolo article, The Basics of Land Contracts. And for a variety of useful articles on real estate closings, see Escrow and Closing in Nolo’s Real Estate section.
The buyer may want to pay to have a policy of title insurance issued on the property subject to the land contract. The buyer can hire a title agency to run a land record search and discover any potential interests attached to the property that may interfere with buyer obtaining a clean title from seller. The parties may agree to split this cost in the land contract agreement.
Land contracts are security agreements between a seller, known as a Vendor, and a buyer, known as a Vendee. The Vendor carries the financing for the Vendee, which may or may not contain an underlying loan. A main difference between a land contract and a mortgage is the buyer does not receive a deed or clear title to the property until the land contract is paid off.
Although the process of selling land is less complex than selling a piece of property with a home, this is still a process that requires the help of a professional. Real estate laws vary from state to state, so its important to work with an experienced real estate attorney when selling your land. The help of a professional becomes even more important if youre creating a land contract.
If there’s a lot of money involved in this deal (like, more than a few thousand dollars) and if you’re AT ALL unsure about their level of competence or trustworthiness – then I wouldn’t hesitate to push for a professional title company or closing attorney to get involved. That will resolve pretty much all of the issues that can come up in this kind of scenario. If you don’t know them well, then you have every reason to be skeptical for your own sake.
Demand a Title Insurance Policy. Title searches of the public records will also show liens or judgments filed against a buyer. The title company will likely ask for satisfaction of those encumbrances before it will insure the land contract on a title policy. Ask to see a copy of the preliminary title report (or commitment for title insurance) to determine if a search reveals anything about the buyer.
The county should be fully aware of this change in ownership because they recorded your deed, but in many cases – the city or township administration is in a completely separate office and they don't share the same systems with the county. As such, they need to be notified separately about the property's change in ownership (and if they aren't made aware of the change, they'll continue sending the property tax bills to the old owner).
While approximate land value calculators and charts are available online for most areas of the United States, sellers should use these figures only for broad estimation purposes. Arriving at a more exact price point to use as a listing price is best done by a real estate professional with a solid track record of successfully selling the type of land being sold.
When you’re selling a home, you want to give buyers all the details about it, such as a list of all projects you’ve had completed and a list of all updates and maintenance work performed within the last decade. You also want to show off the most desirable areas of the home, such as the kitchen or recently renovated bathrooms. Buyers are looking for details on the community, such as nearby schools, the friendliness of the neighborhood and property tax information.
No, the purchase agreement doesn’t need to be notarized – however, in some states (like Michigan, for instance), you technically need to get a witness signature to go along with each party’s signature (the witness doesn’t need to be a notary, it can be pretty much anyone). That being said – there’s nothing “wrong” with getting a notary’s signature on this, it’s just overkill.
Other options to consider are selling your land with owner financing which makes it easier for people to afford. Trying to find cash buyers can be difficult depending on your asking price and banks don't typically want to lend on vacant land. Also, if you have land you want to sell in a hurry and you'd like to get cash for it there are a number of wholesale land buyers that make be interested in making you a cash offer for your land.