Standard Land Contract
A land contract is a legal agreement concerning the sale of real estate. There are different names for land contracts, including installment land contract and contract for deed. The legal guidelines for a land contract will vary depending on jurisdiction, but land contracts basically work in the same way. Before entering into a land contract, both the buyer and seller should be familiar with how a land contract works. Those entering into a land contract should consult with an attorney to make certain that the agreement is legally binding in their local jurisdiction.
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Basic Information
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A land contract should fully state the full legal name and address of both of the parties entering into the contract. It should show the date of the execution (the agreement and signing) of the contract. The contract should indicate what recourse the parties have if the other person breaks the contract. For example, how long must the seller allow the buyer to make a payment or how long does the seller have to transfer the deed after the buyer makes the last payment completing the contract.
Financial Information
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The land contract should state the full selling price of the property. The contract should also indicate when the buyer must make payments, the amount of the payments and the total number of payments. If the deal includes interest, the contract should state what the interest rate is and how it is calculated. For example, the contract should state whether or not the interest is simple or compound or compounded daily or annually.
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Property Description
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The land contract must provide a specific and legal description of the property. In most cases, the current deed recorded at the courthouse will have a proper description of the property that the parties can use when creating the contract. The land contract should address any other property included in the deal or present on the land or in a building. For example, if there are power tools in a garage on the property, the contract should state if the buyer receives the tools as part of the deal or does the seller retain ownership of the tools.
Party Responsibilities
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The land contract should specify each of the party's responsibilities in the legal completion of the land contract. For example, during the contract period, the buyer retains ownership of the property and will receive a property tax bill. The contract should state who is responsible for paying the taxes. When recording the executed land contract and recording the deed when the contract is completed, the court house officials will charge a fee. The contract should state which party is responsible for paying the required fees.
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