Deciding Between Land Contract vs Lease-to-Own Contract

Is it better for a buyer or seller to purchase a property under a Land Contract or a Lease-to-Own Contract?

Under a Land Contract, many states have laws that provide at least some level protection to a “vendee” (i.e. the Buyer). These may include the obligation of the “vendor” (i.e. the Seller) to use the state’s foreclosure process/procedures after a certain percentage of the contract price has been paid or after the vendee has occupied the property for a certain period of time – as compared to the more summary eviction proceeding, which is available to landlords and provides a quicker and much more streamline process for getting possession of the property.

In a Lease-to-Own (sometimes called a Rent-to-Own) scenario, courts may view the parties in a simple landlord/tenant relationship, thereby allowing the landlord to evict the tenant even after substantial rental payments have been paid (which may have been applied to the purchase price for the property).

Stated another way, a Land Contract may grant the potential purchaser with more rights and protections in the property, which tend to safeguard the potential purchaser’s investment in the property prior to the time that the entire purchase price is paid in full.

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