Generally, those seeking a land contract have poor credit or are unable to secure a loan from the bank. A land contract is a type of owner financing where the buyer makes payments to the seller, who holds the title or deed to the property until it is paid off. The terms, including payments and length of the contract, are negotiable. Upon default, the business and title remains the property of the seller and the buyer loses all money paid towards the purchase.
Things You'll Need
- Credit report
Get a professional appraisal of your business to help you set a price. Find a buyer for the business by advertising the property locally, like in the newspaper. Be sure to provide a description stating that you are willing to finance the business.
Compose an application and have prospective buyers complete the application. Include information, such as name, address, personal references, business references and contact numbers for family members.
Review the application and verify the information by checking bank statements, calling references and checking identification. Request an authorization from the purchaser to run a credit check. Pull a credit report and review the purchaser’s credit history.
Contact an attorney and have him compose a land sale contract. Provide the attorney with the terms agreed upon by you and the buyer. This includes the payment amount, amortization schedule and default clause.
Sign and date the land contract and have the buyer do that as well. Get the contract notarized and a seal placed on it for legal purposes. Provide each person who signs the contact with a copy.