A land contract is a type of contract financed by a seller that is intended to benefit both the buyer and seller of the property. 

However, because there are disadvantages on both sides, it’s critical to consult with an experienced land contract attorney to ensure your protection. Here’s an examination of land transactions in Florida and how to get the legal help you need before signing a land contract.

Land Contracts 101 

A land contract allows a person to acquire a home without taking out a formal mortgage by paying monthly payments over time directly to the seller of the property.   The buyer resides in the residence while paying the seller directly on a monthly basis. There is no involvement from a mortgage lender or bank. The property deed and title remain under the seller’s name until the monthly payments are completed, after which the buyer has an obligation to purchase the land. 

Risks of Getting a Land Contract 

There are some risks associated with land contracts for both buyers and sellers. 

Land contract risks for buyers include but aren’t limited to: 

• The property isn’t in the buyer’s name until the end of the contract
• The buyer may still need to take out a mortgage in the future to buy the home if the payments are set to balloon
• Buyers can be evicted from the home like a tenant in a rental until 20% of the home’s purchase price has been paid 

Risks of land contracts for sellers include: 

• Buyers need to be thoroughly vetted 
• Sellers may have to foreclose on the property if the buyer stops paying after 20% of the purchase price has been met 
• Sellers who take control over their properties again may have to finance repairs or renovations if the buyer didn’t take care of the home 

When You Should Get a Land Contract 

Why would someone choose a land contract over outright purchase of a home? The major reason a property buyer might accept a land contract is because they are unable to fund a down payment or obtain a traditional mortgage approval in order to purchase a home in the usual manner. 

If you have poor credit and aren’t able to secure a home loan, a land contract may be a viable way for you to get into a home right away and at some point in the future, own it. After a few years of consistent payments on your land contract, you are more likely to be authorized for a mortgage to complete the purchase.

When to Contact an Experienced Florida Real Estate Litigation Attorney 

Before signing a land contract, contact Florida real estate litigation lawyer Joseph Hughes at (954) 256-5125.