There are thousands of people living in Ohio who would love to be homeowners but either don’t have the credit history or the down payment necessary to secure a standard mortgage through a bank. Whether you flip real estate as an occupation or simply want to sell your primary residence quickly, offering a land contract could help you connect with those thousands of potential buyers.
Many people who don’t qualify for financing from a bank are still hardworking and trustworthy individuals. However, before you take the risk of turning over a property to someone else on a land contract, it’s important to make sure that the contract you sign has enough protection in place for you.
Make certain to include a way to quickly regain possession
When someone has a mortgage and fails to make a payment, their lender will send them letters and then eventually foreclose on the property. In theory, you could pursue foreclosure as a self-financed seller, but that process can be very expensive and time consuming.
Strict rules regarding missed payments can help remind your buyers to prioritize their land contract payments above other expenses. Executing documents, such as a deed in lieu of foreclosure, can help you quickly regain possession when the buyer fails to make payments as agreed upon in the contract.
Make sure the contract is clear that you don’t have a landlord’s responsibilities
Some people don’t understand the difference between buying using a land contract and leasing with an option to buy in the future. A lease option may involve a down payment and large monthly rental cost because the potential buyers still receive all the services of a landlord. Make certain that your contract does not obligate you to perform such duties unless you are willing to do so.
Give yourself protection if the property comes back damaged
Buyers could do everything from leaving cosmetic damage to removing fixtures as a way to recoup some of the money they’ve invested in the property. Including an inventory for the property’s condition and terms in the purchase agreement that allow you to hold the buyer accountable for decreased value because of damage or maintenance failures caused by them can give you legal protection during the land contract, especially if the buyer fails to purchase the home from you. An experienced attorney can provide valuable guidance.