What is a land contract? Are there any dangers involved for the buyer?
A land contract occurs when the deed or title of the property is transferred only after all the payments have been made. This can also be known as a conditional sales contract or installment contract. In a land contract, the greatest danger to a buyer is that they will not hold title to the property until they pay off the balance of the land contract. In addition, however, the buyer is usually restricted from making any repairs or improvements to the home without permission of the titleholder—usually the seller. This could become a point of contention, depending on what the property needs to make it livable, or desirable for the buyer. If the buyer has a sufficient down payment, however, the land contract is treated like a mortgage and there are specific guidelines to allow them to cure any default or vacate the premises—usually more generous than renters’ rights. If the buyer defaults on the land contract, any improvements made to the property become the seller’s, and any down payment
