If you have never heard of a land contract, then you may want to learn a little more about them before agreeing to them in a contract to buy a home. Installment land sales ask you to make periodic payments. They are also called contract for deed, a land contract or contract for sale. Though it does say “land,” land is not actually the only thing you can buy. You can buy any kind of real estate with this kind of contract.
In an installment sales contract, it will say how much the sale price is, the down payment, how often the payments are and the interest rate. It will also discuss who takes care of paying for insurance, property taxes and the maintenance of the property. Usually, this is the buyer’s job, but some contracts may have another party with that responsibility.
Land contracts are held between a vendor (the seller) and the vendee (the buyer). The vendor finances the purchase of the property for the vendee, cutting out the need for a mortgage or loan. Instead, the vendor accepts regular installment payments. The best option for a buyer is generally to purchase a property that is “free and clear” without an existing mortgage owed by the vendor.
After the vendee makes all the payments, they will then be able to receive the deed to the property. This is a different way to buy property, and it may be one that you’re interested in. Your attorney can help you understand any installment land sale contract and explain why it’s in your benefit, or not, to make a purchase in this manner.
