The vast majority of states have no firm set time period or “grace period” for requiring the tender of a Deed for real property upon the completion of payments on a private mortage.
Under a Land Contract, the responsibility for the property insurance payment and the securing of a policy is a negotiated item.
A Land Contract, like all other contracts, can be transferred, sold or assigned — so long as the document itself permits a sale or assignment, or all parties involved in the existing contract consent and agree to such sale or assignment.
There is indeed a risk to a Land Contract buyer if the Land Contract seller has a mortgage on the property being contracted. Buyers need to protect themselves during the purchase negotiations.
In most cases concerning Land Contracts, title to real property does not pass to the purchaser until all or a certain percentage of the land contract installment payments are made.
Until such time, the purchaser (or a partner-purchaser) does not hold any title or ownership in the property.
As such, if the purchaser does not hold ownership, he/she has no ownership interest in the property that can be transferred by way of a Quitclaim Deed. In essence, a drafted Quitclaim Deed would be meaningless because a person cannot “transfer ownership” of something he or she does not own.
The crash of the housing market has left a number of Land Contract holders facing balloon payments on amounts that are equal to or greater than the current market value of the property. Mortgage companies will not lend money to borrowers for such an over-valued purchase, even if the buyer has made several years of payments against the Land Contract.
So what options are available to the buyer and seller who find themselves in such a situation in a Land Contract?
The first fact to understand in such a circumstance is that a person cannot create a Will that distributes property they have already sold.
A Land Contract can be sold or assigned to a third party purchaser — assuming that the terms of the Land Contract itself permits such an assignment or sale.
Standard Legal always recommends that every single pertinent detail to any property transaction be included within the Land Contract document covering said transaction.
But the nature of the question raises a rebuttal question.
The answer to whether or not mineral rights are conveyed with the property in a Land Contract situation where said rights aren’t expressly covered may depend upon state law — or a court’s interpretation of state law.