It`s true! If the buyer has not complied with the monthly payment or any other contractual agreement, the seller may exercise his right of acceleration to claim the total credit balance due on that date. Keep reading for another quiz question. On the other hand, a land contract does not have many protections that come with a mortgage. Since the seller retains the property until the ownership agreement is fully paid, the buyer could eventually fall behind and lose interest on the property if he misses only one payment – in this case, the buyer has the right to pay the payments made until today (although buyers may be entitled to some of their money in some states – check local laws). Here are some concrete scenarios in which a land contract could benefit you: contracts can be difficult: we had a potential buyer in a land contract who wanted to refinance his property after living five years in his house. Unfortunately, he found out that he didn`t own the house after he got to us, and we checked the contract with him. In the end, we had to refer him to a real estate lawyer for advice on how to proceed. There may also be other benefits to using a field contract. When a third-party lender, z.B a financial institution, grants a loan, that third party has its own interest to protect itself from the other two parties involved, the seller and the buyer. Determining the right property and the value of the property to be used as collateral is important for the lender. For example, the lender generally requires a securities service, including title search and title insurance, by an independent securities company, an assessment and review of termites of the property to ensure that it has sufficient value, ground expertise to ensure that there is no intervention, and the use of lawyers to ensure that the financial statements are properly completed. These requirements of the third-party lender increase the establishment fees that the lender imposes on the seller and/or buyer. If the seller is also the lender, these fees are generally not charged by the seller and can result in savings and fewer complications.
The seller`s position may also be that the buyer, if he requires one of these services, could bear the costs and make arrangements himself. In the case of land that is only relatively unded and where the seller is willing to finance, the price of empty land may be so low that conventional closing costs are not profitable and may be an obstacle to a quick and simple sale. Simple financing and a simple sales transaction can be a good selling point for a seller to offer a buyer.