Many people purchase a home through a Land Contract from their parents. But the sale of a home to one child via land contract should also include some good estate planning via a Will or Trust — especially if there are other siblings involved.
Most land contracts allow the current owner to retain title to the property until such time as the purchase price in the contract has been fully paid. As such, creditors most likely will not have a right to pursue a home purchased under a Land Contract, as the “buyer” in a land contract is not the titled owner until all payments are made.
Selling a house via Land Contract or Contract for Deed allows the seller to finance the purchase price on behalf of the buyer. The seller maintains a financial interest in the home until the buyer pays off the Land Contract fully.
The question of insurance comes into play when the property detailed in the land contract is under mortgage with the seller, and not owned outright by the seller.
If a tenant in a lease or a buyer in a land contract do not make the monthly payments as their contract dictates, the property owner must take legal action against the defaulting party to reclaim their property.
The parcel number and prior recording date should be contained on the existing Deed for the property. If you do not have a copy of the existing Deed, check with your county recorder’s office.