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Basics of Land Contracts

The legal contract in the written form, also regarded as an agreement, which is used for buying a real estate like a house, a vacant land, an apartment, a real property or a commercial building is known as a land contract. This contract is also a form of seller financing. It is kind of a sell private mortgage but unlike mortgage you do not need to borrow money from a bank or lender for purchasing the property, here you have to make the payment directly to the owner of the real estate. Here are a few basics of land contracts:-
  • Selling a House: -The seller and the buyer both sign a land contract for this, which covers all the terms and conditions regarding the sale. If both the parties are satisfied with the terms and conditions which also include the amount of the purchase price and the time period decided for the payment of the amount, the property’s legal title gets transferred to the buyer from the seller via a way of a contract for deed buyer of warranty or some other deed, used for conveying the title.
  • The Necessity of the Land Contracts: – These land contracts are beneficial for both the buyer and the seller in many ways.
  • Benefits of the Buyer: – If a buyer is interested to buy a real estate for sale but due to some reasons is not able to obtain the approval for the mortgage then both the parties can agrees upon signing a land contract so that the buyer can make the payment directly to the seller.
  • Benefits to sellers:-If the sell real estate mortgage note is used by the buyer to make the payment then the seller can get the full price up front but he cannot negotiate a higher price for the property which he can do if he and the buyer both signs on a land contract.
  • When the Buyer Becomes the Owner of the Purchased Land Contract Property? :- When the final payment is done by the buyer to the seller and all the conditions of the land contract are met, the property deed will be filed to the concerned government office and the legal title will be transferred to the buyer and he will become the new owner of that real estate.
  • What will happen if the Buyer can not make the full payments according to the Land Contract Payment?: -If the land contract defaults then the seller is allowed to file a court action and this is known as land contract forfeiture. It may result in giving up the entire money paid till that date to the seller. Better to say, the real estate will be kept to the seller and the money paid by the buyer also be kept with the seller.


It is advisable to consult a learned and experienced attorney before going for any kind of sell promissory note or land contracts. For this entire process, you can completely rely upon Capital Mortgage Notes.

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