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.<\/p>\n
A Land Contract document can and should spell out the rights and responsibilities of the seller and purchaser with regards to protection of each party in the property.<\/p>\n
Further, many states have laws that protect a purchaser in a land contract case, once the purchaser has paid a specific portion of the purchase price.<\/p>\n
However, these laws vary from state to state.<\/p>\n
Of course, an outright purchase provides more protection to a purchaser since title vests in the purchaser upon the closing of the transaction (as compared to a closing that could occur years from the original contract in a land contract situation).<\/p>\n