Land Contract Law in Florida

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In a land contract the owner of the property also provides the financing for the purchase.
In a land contract the owner of the property also provides the financing for the purchase. (Image: Thinkstock/Comstock/Getty Images)

Land contracts, also known as trust deeds and contracts for deeds, are an alternative method of buying a property. With a contract for deed, which is how land contracts are generally referred to in Florida, the buyer gets financing from the seller instead of going to a conventional mortgage lender, such as a bank. Although this method of sale and purchase is widespread throughout the United States, Florida has particular laws regulating contracts for deeds to consider.

Definition

In Florida a contract for deed, or land contract, is a real property sale where the owner provides the financing for the purchase. The seller keeps the title for the property until the buyer makes the final payment on the agreed amount.

Foreclosure

Using a land contract instead of a regular mortgage does not provide any additional protection to buyers or sellers when it comes to foreclosure, unless specific clauses are included in the contract. Under Florida law any conveyance instruments used to buy a property, whether it is a mortgage loan or a land contract agreement, are considered as mortgages for foreclosure purposes. This means sellers have no quick and easy way of regaining possession of a property if a land contract buyer stops making payments. On the other hand a land contract buyer could lose possession of the property if he stops making payments to the buyer regardless of the amount pending.

Right of Cancellation

Under Florida's Title XXXIII Regulations of Trade, Commerce, Investments and Solicitations, Section 498.028, the buyer of a land contract has the right to go back on the agreement for whatever reason within a seven-business-day period from the execution date of the contract. If a buyer exercises this right, the seller must reimburse the buyer all funds and fees within 20 days of receiving the cancellation notice. Notice land contract sellers cannot charge buyers with any penalty or obligation if they decide to exercise their right of cancellation.

Notice of Assignment of Contract for Deed

In Florida the seller of a contract for deed can sell the rights to a property to a third party while the buyer is making payments. However, Florida land contract law requires the seller to provide the buyer with a signed and notarized notice stating the contract for deed has been assigned to another party. The buyer should, from then on, continue making payments to the new owner of the land contract.

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