Land Contracts / Contract for Deed / Installment Land Contract
Sometimes, due to financial problems (inability to obtain bank financing) of the buyer, a seller agrees to enter into a land contract/contract for deed/installment land contract (terms used interchangeable) for the sale and purchase of property. This is NOT a lease or a lease with option to purchase. Beware, often times through negligence, misinformation or mistake, what is intended to be a lease or lease with option to purchase is actually a land contract with potential risks for both the seller and buyer.
Unlike a lease, whereby you can evict a tenant in thirty (30) days, a buyer who defaults obtains a land contract cannot be simply evicted. In a land contract, the buyer obtains “equitable title” to the property and seller retains “legal title” to the property. In the case of default by the buyer, the seller must proceed with filing a foreclosure against the property purchased under the land contract. The property MUST be sold in a foreclosure proceeding (generally takes 6 months to 1 year), and if the property sells for more than the remaining debt due in the land contract, the buyer may be entitled to the difference. (This does not apply for Ohio transactions). Please call us to discuss the difference)
If you are considering entering into a land contract or a lease with option to purchase, please call us @ 859-578-6600. Know your risks as a seller and/or buyer. And remember just because something says it is a lease with option to purchase does not make it one!