Anyone who has purchased some sort of property should have a land contract form transferred to them by the seller. This is also called a land contract agreement and it’s a legally-binding document. With this contract, the seller has signified his intent to accept payments from a buyer for a property he owns. Once the buyer has paid the loan to the property in full, the seller transfers the property’s title to the buyer.
A land contract form is one kind of real estate transaction. Here, the seller offers the buyer a unique financing option. The latter then pays the former the price they had agreed-upon in installments for a set amount of time. These payments given to the seller are a combination of both the principal amount and interest – just like a typical house mortgage. Generally, a balloon payment comes into play at the end of the agreement.
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A land contract is a written legal agreement or contract used for the purchase of real estate like a house, a commercial building, an apartment building, a vacant piece of land or other real estate property. A land contract sample is a type of seller financing.
Although it’s similar in substance to a mortgage, it differs in the sense that instead of the buyer borrowing funds from the bank to purchase the property, the buyer makes real estate payments to the owner until the entire price gets paid in full. Both the buyer and the seller will affix their signatures on the land contract form which covers the terms and conditions they both agreed upon.
When all of the terms and conditions have been completely satisfied, especially the payment terms over the specified period of time, the property’s legal title then gets transferred by the seller to the buyer via some kind of deed like a warranty deed.
During the period that the buyer makes his payments to the seller, he’s considered to possess an “equitable title.”. As a holder of such title, the buyer has an interest in the property while the seller gets precluded from offering the property to anyone else.
The seller is also precluded from placing the property under any encumbrance or lien that interferes with the buyer’s interest. The property’s “legal title,” however, still belongs to the seller until the buyer makes the last payment as stipulated in the land contract agreement.
As soon as the buyer makes the last payment and all of the land contract’s conditions have been completely fulfilled, the deed of the property gets filed with the correct government office, usually a county registry of deeds. This action officially makes the buyer the new property owner.
The signing of a land contract template by the buyer means the same thing as signing a mortgage. But it’s not the same as a lease contract form that’s designed for the rental of properties owned by a landlord. A land contract form is an agreement to buy the property without having to apply for a loan as the seller who provides the financing.
After the final payment, the seller must transfer the ownership to the buyer. A land contract sample the document that makes the transaction legally-binding and official. Land contract forms are also called agreement for deed, land installment contract, installment sale agreement or contract for deed.
Like any other standard contract in the world of real estate, a land contract agreement includes the following details:
A land contract form is a contract between two parties – the seller and the buyer – regarding a specific piece of land. Property developers sell and advertise pieces of land just like real estate agents sell properties.
Moreover, most land contracts involve purchases financed by the sellers. There are some borrowers who buy lands and opt to finance their purchase through bank loans. To make things clearer, here are the most common types of land contract forms:
During the duration of the land contract agreement, the seller would receive monthly payments consisting of the principal amount and interests. Escrow here may get established too, so that the insurance and tax payments given by the buyer will go into an account so that the payments are automatically made when the due date comes. Alternatively, the buyer may choose to pay insurance and tax bills independent of the escrow.
One thing good about a land contract form is that it is relatively straightforward. It involves the buyer giving a down payment to the seller for the property while the seller assumes the role of the bank as he will finance the balance of the property’s purchase price. Both parties negotiate together to determine the interest rate at the time of the purchase.
Generally, it will be the seller who assumes the loan for a set amount of time until a balloon payment would come into play. To find out if such an agreement is a good idea, one must look at the pros and cons:
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