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.
The remedy for the Buyer in this situation would often depend on the terms of the Land Contract document itself.
Many Land Contract documents permit the Buyer to make payments directly to the mortgage company involved with the property. The Buyer can then claim a “credit” against what is owed to the Seller, and still be in compliance with the terms of the contract.
Absent such language in the Land Contract document, state common law or statutory law might provide the buyer with a remedy, since the Seller would be in default or breach of the Land Contract. But this path can get legally technical and may require some assistance from an attorney, as likely a court case may need to be filed to protect the Buyer’s interests.
For a well drafted Land Contract document, see Standard Legal’s Land Contract legal forms software option.