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Interest rates cannot exceed 11% for most Michigan land contracts.

A land contract purchaser is not a renter, but has partial ownership while they are making payments. The seller holds the deed until the purchase is fully paid, and the buyer has most of the other rights and responsibilities of ownership throughout the payment period. It is a legally binding agreement.

Sale deed gives the rights and interests in the property to the new owner. Sale agreement gives a right for the purchaser to purchase the property in question on the satisfaction of certain conditions. Sale agreement precedes sale deed, signed and executed by the seller and buyer on a non-judicial stamp paper.

It is possible for the interest rate to change over time, but the average interest rate has to be 11% or less. In general, the buyer is in charge of making all repairs and paying property taxes in most land contracts. Most contracts also say the buyer must get homeowners insurance.

These are the typical terms in a land contract: Name and address of all parties. A description of the property. Acknowledgement of the person who owns the property.

Pros And Cons Of A Land Contract Pro: It's Easier To Get Financing. ... Pro: It's A Win-Win For Sellers. ... Con: The Buyer Depends On The Seller. ... Con: Contract Vagueness. ... Con: Higher Interest Rates. ... Con: Homeownership Gray Area.

Land contracts are used so that the purchase or sale of a property or piece of land can be accomplished in a simplified and, in many cases, more cost-effective manner.

A big disadvantage for sellers who participate in a land contract is that they have to wait for the buyer to pay off the home over a certain number of years.A balloon payment might be included so that a buyer has to pay off the balance within a shorter amount of time.

A land contract allows the buyer of a property to use it while the seller continues to retain the deed.For example, suppose Bob buys a property from Jack for $100,000. Using a land contract, Bob agrees to pay Jack in monthly installments of $2,000 over the course of 50 months.

The seller is responsible for the maintenance of the property, any repairs and for paying property taxes and insurance, the same as any landlord. The seller also gets to deduct those costs, as well as any mortgage interest, on his or her tax returns.