By Tony Howard
A Land Contract is an installment contract for the sale of land or real estate between private parties This is different from the conventional sale of real estate because the seller (vendor) has legal title until paid in full. The buyer (vendee) has what is called equitable title during the contract term and does not receive the actual deed to the property until they have made all payments to the seller and met all terms outlined in the land contract.
This type of sale amounts to the seller acting as the bank or mortgage holder.
A Land Contract sale offers a lot of flexibility because the buyer and seller are able to set the contract up at what ever terms the two of them may agree upon.
The maximum interest rate that the State of Michigan allows the seller to charge is 11% interest. A buyer should check to see if there are any outstanding mortgages or liens on the property and what impact, if any, it would have on the buyer. It is probably a good idea to have a Title Company, Mortgage Professional, Attorney or Realtor involved in this transaction, even if only for advice!
Tony M. Howard is a mortgage broker at Advanced Mortgage Concepts located at 1031 N. Washington Street, Lansing, MI 48906. His phone number is 517-484-6610.