Land contract: What is it and what does it convey?

Owner financing helps a buyer to purchase a home, when he/she cannot afford to make the required down payment. It is a process with the help of which a seller offers either part of whole house purchase price. A buyer needs to pay the agreed upon monthly installments to the seller in order to repay the borrowed amount. Owner financing is also referred to as seller financing. Both buyer and seller need to sign a land contract in order to make it a legally valid transaction.

Required information for the contract

The following information is required for a land contract.

•Name of the buyer

•Name of the seller

•Address of the buyer

•Address of the seller

•Date at which the contract is signed

•The payable amount as agreed by the buyer

Along with the above details, a land contract also requires the sign of witnesses in order to make it a valid transaction. The Notary Public also needs to sign the legal document.

What a land contract conveys

A land contract conveys the following information.

•It is a security agreement between a buyer (vendee) and a seller (vendor).

•Through this contract, a vendor agrees to sell a real estate by financing the purchase of a vendee.

•The vendor retains the legal title to a property while the vendee receives an equitable title.

•Upon full payment, the vendor hands over a deed to the property to the vendee.

Advantages of owner financing

Owner financing offers a number of advantages, whish are listed below.

•The buyer may qualify for loans with variable payment options.

•Buyer gets the flexibility to mix and match options as well as negotiate for a suitable rate.

•It also helps a buyer to rebuild his/her credit history.

It is advisable that you take help of a real estate attorney to fill out the required information in a land contract. You’ll be benefited if you hire an attorney in property transaction as he/she may guide you in the overall home buying procedure.