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I’ve had several people wanting to buy on land contract lately. Very few sellers want Land Contract financing because in most cases they want the funds to purchase their next home and don’t want to deal with any problems that may arise.
However it can be a good way for a seller to generate income especially with the low interest rates paid on savings accounts. They may also enjoy reduced capital gains taxes and they get to set the terms.
Some drawbacks-
If holding the title is important to the buyer, a land contract is not a good option; title does not automatically pass to the buyer in a land contract deal. This is a biggie- make sure the contract spells out at what point title is transferred to the buyer and how it will be transferred, the type of ownership and how it will be recorded. You should consult an attorney to draw up the contract and advise you- I am not one and am just sharing some tips.
Recently, I sold some land and the sellers discovered they did not have a deed. They had paid off the land 40 years ago. They did eventually get title but it was costly in time and $$.
Sellers generally retain the title until the final payment is made, tax authorities and inspectors could hold the seller liable for any tax/maintenance problems that arise. If the buyer fails to keep up the payments, it is not easy to collect or evict the buyer.
A Purchase Money Mortgage may be a good option to a Land Contract.
