Land Contract? Tell me what I need to know.

[MAGICX2]

We had been renting another home for three years when my husbands unlce passed away and the family offered the house to us to purchase. We own property that we were paying off and are now ready to build. We have only owned the home for a year.

My husband's cousin would like to purchase the home with a land contract. I know nothing about this. They want to do the land contract for 12 months. They have agreed to take car of all repairs/maintanence/upkeep to the home. There are a few key things that I am unsure of:
1. Do they claim the property taxes or do we? If them, do we ask for the full amount of our mortgage payment, including the taxes?
2. Does their monthly payment go towards the cost of the home?
3. When the 12 months is over, can they back out of buying the home or are they locked in?

We have an appointment with an attorney this Friday, but I wanted to be a little prepared going in so I don't look like a complete idiot. Any help/advice on this situation would be greatly appreciated!

 

[Praying Colonel]

We had been renting another home for three years when my husbands unlce passed away and the family offered the house to us to purchase. We own property that we were paying off and are now ready to build. We have only owned the home for a year.

My husband's cousin would like to purchase the home with a land contract. I know nothing about this. They want to do the land contract for 12 months. They have agreed to take car of all repairs/maintanence/upkeep to the home. There are a few key things that I am unsure of:
1. Do they claim the property taxes or do we? If them, do we ask for the full amount of our mortgage payment, including the taxes?
2. Does their monthly payment go towards the cost of the home?
3. When the 12 months is over, can they back out of buying the home or are they locked in?

We have an appointment with an attorney this Friday, but I wanted to be a little prepared going in so I don't look like a complete idiot. Any help/advice on this situation would be greatly appreciated!

You need to know the law on real estate, including land sale contracts, varies from state to state and can often be quite complicated. You should consult with a real estate attorney in your state.

 

[akcire]

A land contract is a bad idea, it essentially gives renters an ownership interest. This means if they don't pay, you have to foreclose on them. If they were just renting you would only have to evict. I know you said this was a relation, but this is business.

I would 'rent' the house to them with an option to buy in 12 months at the prearranged price. Frankly, if they can't get a mortgage today, it is unlikely they will be able to in 12 months.

I agree with PP that you need to speak with a lawyer, and one that has land contract experience.

 

[MAGICX2]

We have an appointment with an attorney on Fri. I am sure she will go over everything with us then, but I was just trying to get a feel for what to expect. Is there anyone who has been through a Land Contract that has any advice?

 

[WeLoveToyStory]

Have friends that sold a home on land contract and turned into a disaster. House burned down and ended up being a horrible mess with insurance. It's severa years later and things still have not been finalized over it.

 

[PrincessDadx2]

We have an appointment with an attorney on Fri. I am sure she will go over everything with us then, but I was just trying to get a feel for what to expect. Is there anyone who has been through a Land Contract that has any advice?

Usually a very bad idea. PP have detailed problems on the seller side, on the buyer side you are making payments for an asset that is not in your name. Things happen and many people have been on the losing end of a land contract.

I would personally not do it. I am sure that 99 of them work out OK, but I am always the 1.

 

[*pixie*dust*]

Land contracts are usually disasters waiting to happen. Can't the relative get a mortgage? If they can't get a mortgage are you prepared to foreclose on them and all those legal ramifications?

 

[Luvchefmic]

Just popped in on your thread out of curiousity because I didn't know what it meant BUT please don't get into any real estate deals with a relative...run...maybe there are a few exceptions to the rule but personally I think it is a BAD idea..personal experience we rented my MIL's house for a few years, then she passed away, left house to SIL and stipulated that we could continue to rent, then BIL got involved...big mess...DH & my SIL no longer speaking..3 yrs later