A Land Contract is a type of owner financing that allows the buyer to make payments
to the seller for a home or land purchase. The buyer gets to use the property but the
seller hangs onto official title until paid in full.
The contract comes under several names including Real Estate Contract, Contract
for Deed, Installment Sale, and Land Contract. It is an alternative way to document
the seller financing arrangement from the more common Note and Mortgage or Note
and Deed of Trust.
One big consideration with a Land Contract is that the buyer will not receive the
Warranty Deed to the property until the purchase price is paid in full. That means the
seller stays in control as official title holder while the buyer makes payments. Think of
the contract like a layaway program for the Deed.
So what's the big difference? Well with a Deed of Trust or Mortgage the seller
provides a Deed to the buyer at closing, transferring title to the buyer. Then the
buyer simultaneously gives back a Purchase Money Mortgage (or Deed of Trust in
some states) to the seller for the portion financed. When the amount financed is paid
in full the Lien is simply satisfied.
When the seller holds fee simple title using a Real Estate Contract the buyer is
holding equitable title. Since the buyer does not yet have the Deed it is almost
impossible for the buyer to obtain any type of secondary financing unless the
Contract is paid off.
The buyer also risks the seller encumbering or clouding title before the Contract is
paid and the Deed released. To provide greater protection, the Fulfillment Warranty
Deed can be held in trust by a third party escrow servicing agent
If the buyer quits paying and the seller needs to take back the property, a Real
Estate Contract has the advantage of being faster and less expensive than a drawn
out foreclosure process on a Mortgage or Deed of Trust.
The accepted use of a Real Estate Contract varies by state. They are common in
many Western states like Washington, Oregon, Idaho, and New Mexico along with
some Mid-Western states such as Michigan and Wisconsin. However a few states,
like Texas, have passed regulations to prohibit use of Contracts for Deed.
A Real Estate Contract can be unrecorded or recorded at the county level depending
on local practices. A seller can also sell contract payments for cash now. Just know
that some investors may require conversion to a note and mortgage or a note and
deed of trust.
A knowledgeable title company or real estate attorney can assist in selecting the best
method of documenting the seller-financed transaction.
Tracy Z. Rewey has been making money full time with owner financing for over 20
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Owner-Financed Land For Sale
In the current economy owner-financing is becoming an increasingly popular option for
buyers and sellers of land. Offering the option to finance the land directly from the
seller without the normal credit check and requirements involved in land loans allows
more potential purchasers the opportunity to buy land. The Land Wrangler is an
informational website that provides articles about owner financed land and links to
websites that specialize in or consistently offer land for sale with owner-finance options.
Featured Land - 40 Acres, Well, Electric, Utilities
Here are some details:
40 acres M/L
located in Texas County Missouri, the biggest county in Missouri
in the heart of the beautiful Missouri OZARKS
this property is only 9.3 miles drive to Houston, Missouri, the county seat of Texas County
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churches, etc -- it's private, peaceful & quiet, but also close to town and anything you might
need, it's Not way out in the middle of nowhere. It's only 3 and 3/4 miles off of Highway 63,
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the closest neighbor is about 1/4 mile away)
The land is very nicely square shaped, it's about 1/4 mile on all 4 sides
Check out this listing on the Featured Owner Financed Land
More Owner financed land resources
In addition to the individual state pages that provide links and listings, this section of
the website will feature articles and information for locating opportunities to purchase
land with owner financing available.