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 the property is owned outright with no title or mortgage restrictions, it is solely a decision of the seller as to whether or not homeowner’s insurance should be secured. Obviously, it is safe to have such insurance.
However, if the property is still under mortgage between the seller and a loan holder, we suggest the seller carefully read the mortgage contract. In nearly all instances, the mortgage company or loan holder can immediately collect the balance due on a mortgage if the minimum required insurance is not in place.
Find complete details on Standard Legal’s Land Contract legal forms software here.