A Letter to Potential Land Contract Vendors and Vendees.

Dear Potential Land Contract Vendors and Vendees:

There is a valid point to be made regarding a land contract. The paperwork is just a small part of the picture for any transaction. Always (and I mean always) strongly consider the person on the other side of the deal. You are hooking your wagon to that individual. The paperwork cannot transform them into someone else.

A Vendor under the land contract is really acting as the lender for the Vendee. Sometimes, but not always, a person is seeking a land contract because they are unable to obtain a bank/ credit union loan. Those institutions have individuals trained to measure whether the loan is a risk worth taking. You do not have that luxury. So, proceed with caution and do your homework before entering into a land contract as a Vendor.

On the other hand, a Vendee also has some risks inherent when signing a land contract deal. A land contract is an agreement that can come back to bite a Vendee. A Vendee can make the payments for years and then, due to a health issue (or some other life issue), miss one or two. When that happens, there is a breach that leaves open the ability for the Vendor to foreclose and take the property back. Yes, banks and credit unions can do that too, but they tend to be regulated that way. Vendors who do not do land contracts regularly are not. So, a Vendor with a certain outlook or personality could be unreasonable and take the Vendee for a most unpleasant ride.

Land contracts are just a tool. A way to buy and sell real estate. They can work out well when both parties enter the agreement with their eyes wide open and maintain respect for each other.

Please reach out to an advisor before inking a land contract. The paperwork is only part of the story. Get advice on whether a land contract makes sense for you, in your situation.

All my best.

Walter