Is it better for a buyer or seller to purchase a property under a Land Contract or a Lease-to-Own Contract?
Depending on the way that the two Sellers held title to the property, and depending on the laws of the state where the property is located, the contract to sell the property should still be enforceable by the Buyer.
The Truth in Lending Act (TILA) applies to Land Contracts to the same extent that it does to other home-secured loan. But that does not mean a form is always required.
If the Seller in a Land Contract dies before the contract payments are made and the property title transfers, how the Land Contract document itself is written has a significant effect on the process.
If a Seller in a Land Contract does not fully own the property under contract, often a mortgage is involved through a third party lender. And if that Seller doesn’t make the required mortgage payments to the lender even though the Land Contract Buyer is paying the Seller, it can put the property in financial jeopardy.
But the Land Contract Buyer does have some options to overcome this situation.
Under a Land Contract, the ‘Seller’ still holds an interest in the property until the contract is fully paid. At times, that Seller may wish to use the property as collateral for a loan or other interest. But is it legal for the Seller to use a home currently under Land Contract as collateral?
Most states treat a mobile home as personal property, not real estate. The land must be treated separately from the mobile home itself.
Given that, to sell a mobile home using seller-financing, two different documents must be prepared to handle the two sides of such a transaction: a Personal Property Lease for the mobile home, and a Land Contract for the ground on which it sits.
A filed Land Contract where the Buyer has defaulted and moved out should be terminated so that there are no clouds on the title to the real estate should the property be sold in the future.
When a Buyer is purchasing real estate under a Land Contract from more than one owner, it is important that the legal contract documents contain signatures from all ownership parties to the contract.