What is a Land Contract
What is a Land Contract?
- What a land contract isn’t: Buying on land contract is not the same as signing a rental agreement with a landlord! Signing a rental agreement is agreeing to pay the owner of the property for the right to live there according to the terms of your rental agreement. Signing a land contract commits you to actually buying a property over time.
- What a land contract is: Buying on land contract an alternative to traditional financing when buying a home. The seller finances the purchase, and the buyer makes contractually agreed upon payments over time. When all payments have been made and no debts exists between the parties, the deed is transferred to the buyer. This is a similar but not the same as “rent to own” or “lease with option to buy”.
- Expectations: We want to help set your expectations properly for buying a home on land contract, and for you to realize what a great opportunity this can be. But, it’s up to you to familiarize yourself with the norms and terms of land contract home buying. For a good overview of land contracts in Michigan, we recommend this article from MichiganLegalHelp.org.
- A land contract becomes a binding agreement and a financial commitment the moment it’s been signed: As a buyer, you should check the payment terms closely before signing to avoid surprises. Seek any support or representation You may need to feel comfortable in their agreement prior to signing. There is a lot to be aware of when buying a property – so much that many people take years to understand most of the terms within their agreement.
- Mutual trust and good communication must be developed over time between buyer and seller: ValDetroit tries to help as much as possible by answering questions and providing the buyer with a copy of the terms prior to signing, and an “orientation document” with an outline of the most important aspects of the land contract. However it’s not possible to learn everything beforehand. Parties should work to stay in good communication, ask questions when doubts arise, and work to fulfill their promises.
You should inform yourself about standard land contract practices in the state of Michigan, and seek assistance of an advisor or professional when considering a land contract. One good source for online legal help and information about land contracts in Michigan comes from Michiganlegalhelp.org.