Land Contract Insert Required Fields For Free

A land contract is often viewed as a way to "pay down the purchase price" before obtaining a regular mortgage to buy the property outright. Often, the terms of the contract will call for 5-10 years of regular payments, concluding with a balloon payment for the balance of the mortgage.

Disadvantage #1: The title does not automatically pass to the purchaser in a land contract. Disadvantage #2: The seller could be held legally responsible for inspection issues with local or state authorities. Disadvantage #3: Forfeiture of a land contract by the purchaser is a fairly common occurrence.

Setting up a basic land contract is fairly simple if both the buyer and seller agree on the terms of the sale and financing. Agree upon a sale price. Before you begin structuring the land contract, meet with the buyer and agree upon a sale price if you have not done so.

Standard contingencies include things like a buyer's inspection of the house and satisfaction with the condition that the house is in. Contingencies such as these are often considered a matter of course and their presence within a purchase agreement will likely not be contested.

Larger Down Payments Land loans typically require a larger down payment than traditional mortgages, often as much as 20% to 30% of the asking price. If you are purchasing raw land, the preferred down payment can be as much as 30% to 50% of the total cost.

To be enforceable, a purchase contract must set out the essential terms of the agreement; in particular, it must clearly describe the "three Ps" (parties, property and price) and other key terms such as the completion date and the particulars of any vendor financing or leaseback.

As discussed above, a purchase agreement should contain buyer and seller information, a legal description of the property, closing dates, earnest money deposit amounts, contingencies and other important information for the sale.