Using a Land contract form to buy either a home or finance vacant land is similar to getting a mortgage in many ways. Once you have decided
on buying vacant land, you will need a land contract from your broker. You will need to be aware of the terminology used in the form and also how
to go about getting the best land contract for yourself.
In case of a land contract with seller financing, the seller will be known as the mortgagor and the buyer is usually known as the mortgagee. Another distinguishing feature about this is that the seller is the ultimate decision maker. He decides whether the loan is to be advanced to you.
Yes you do. Whether you borrow the money from a lender or buy it directly from the seller - you are the owner of the land. You carry the rights and the responsibilities of the parcel. However, the deed of the property does not lie with you, yet. You get equitable title of course. When you are buying vacant land, a land contract form will allocate all the privileges of the land to you.
A Land contract form signifying a property purchased under a land contract is better than a bank loan because it will not cancel your application
based on your current ability to pay. If you do not have cash stowed away for that down payment, and are temporarily earning only a small amount,
this can work for you if you have a motivated seller!
The initial costs you have to bear with a land contract are lower than those required by banks. Also, the seller does not have to subject himself
to endless waiting to find a buyer if he is willing to negotiate. You also enjoy the advantages of a higher price when you sell the land if you
improve it with a structure.
Since the buyer does not have to pay a hefty amount as a down payment, the seller can always demand a better price for himself! You will find this
particularly handy if you are a seller looking to finance vacant land for your buyer. All kinds of deals can be worked out if both parties are
willing to get the deal done.
I have seen sellers allow buyers zero down payment for a percentage of the sale after the buyer builds a home on the lot. You just never know a man's motivation unless you ask.
The only thing you won't get with a land contract agreement is authentication that is carried out by a mortgage banker. When you apply for a new
mortgage loan, the provider takes care of a number of important details for you. This includes the title search, surveys on property, etc.....
Your bank will also set up escrows for other items like property taxes and insurance. It will also prepare the required documents itself. When you buy under a land contract form, you do not get these things taken care of for you.
Traditionally, lawyers dealing with real estate or real estate agents handled most land contract forms. However, with the advent of the internet,
most people are able to download the basic format online. However, if you are buying vacant land, we have a word of caution here:
It is always better not to go for the general forms that are available online. There is a simple reason behind this. The general forms you will
find when you are looking to finance vacant land are not tailored to your needs. They are generalized at best and may not include important
details you would like to include.
Another problem you might face with these generalized online forms is that there is no saying what data you will get. Most sites cater to
generalized content. If you modify them according to your preferences, there is no guarantee of it being accepted in a court of law.
You can always use these as drafts before you prepare the final document with a professional's help. However, as a good rule of thumb, it is better to go for a qualified lawyer or real estate agent who deals in land and use their forms.
This is vital. A Land contract form is just like any other contract. It must contain details such as the name and address of the parties, the
address and price of the property in question and the other terms and conditions entered into. It should be verified by the signatures of both
the parties and ratified (with a notary).
It is best to go for a personally drawn up land contract form from your lawyer of agent. This will contain all the details pertaining to your
particular property, all the conditions you mutually agreed upon as well as standard stipulations. This will ensure that your agreement is safe
and valid in the eyes of law.
A land contract form should be provided to you by your broker as a sign of acceptance of the sales agreement between you and the seller. Choose one with care, and you will enjoy the benefits of a deal well deserved!
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