All About Land Contracts
For those who are new to the real estate world, it may be helpful to define what a land contract is. According to The Law Dictionary, a land contract – also known as an Article of Agreement for Bargain and Sale – is a "contract for the sale of land in which the purchase price is to be paid in installments and the title to the property is to remain in the vendor until all or part of the purchase price has been paid." An even broader definition is "any contract relating to an interest in real property." Another term you might hear that is synonymous with land contract is contract for deed. While it can be more useful to go over the components found in a land contract, make sure to remember that a land contract relies on state law for its creation and enforcement.
Just like with any other contract, there are specific components or clauses that make up a land contract. To start, there is the offer. The seller of the property, who is oftentimes referred to as the vendor, conveys what he or she is willing to sell. That offer is an important component because of the parties’ subjective views. The offer can come from the buyer or seller. When a buyer is creating an offer to sell a property, it’s imperative to have a strategist developer or commercial advisor review the offer .
The next component is the agreement. It’s important to understand that the buyer and seller must mutually agree to enter into a land contract agreement. However, once the buyer is ready to purchase the property, he or she may see additional clauses that he or she doesn’t necessarily agree with. Oftentimes, the buyer wants to change or renegotiate clauses, such as adjusting the purchase price or financing the property for a longer term. It is important to get an attorney involved if the buyer is not in agreement with the clauses in the offer. Verbal conversations between yourself and the buyer/seller do not constitute an agreement.
Once you and the other party agree to the terms of the land contract, you’ll have an agreement. It’s important to ensure that the agreement sufficiently addresses essential issues such as the basic information about the property, the purchase price, payment terms, the legal description of the property and any other contingencies which may be appropriate to your transaction. When creating an agreement, it is recommended to have an attorney initiate the process so these issues can be reviewed directly with the attorney. Therefore, ongoing communications with the attorney may be required throughout the process.
The Role of a Land Contract Lawyer
Hiring an experienced land contract lawyer near you is a must. Land contracts are a complicated area of the law that requires a deep understanding of Michigan statutory and case law. Further, it’s vital for you to understand the risks and benefits before entering into a contract. An experienced real estate lawyer will know how to protect you if something goes awry with the land sale.
A land contract is a unique type of property transfer, and its use is growing. A land contract is like a form of owner financing. In other words, the buyer does not get a mortgage or any other traditional type of financing. Instead, the seller agrees to carry "paper" just like a bank would. Typically, the buyer makes one down payment, then monthly payments until the house is fully paid off. When the house is paid off, the seller provides a warranty deed to the buyer, and the property is legally transferred to the buyer.
Theoretically, this sounds great.? In reality, however, sellers take advantage of buyers more often than not. Our land contract lawyers have seen it all, from the home that is not worth what the buyer paid to the home that is a complete teardown (after closing, of course). If you are buying a home via land contract make sure you have an attorney review the deal to ensure your interests are protected. For example, the buyer should own the home free and clear once they’ve paid for it, and the seller should transfer the property to the buyer via a warranty deed.
How to Select a Land Contract Lawyer Near You
When looking to hire a land contract lawyer, some of the most salient criteria include experience, local knowledge, and client testimonials. When it comes to experience, your lawyer should have an extensive background in similar cases, having worked with other clients for land contract disputes, transactions, and default litigation. Local knowledge brings a qualified land contract lawyer closer to home for expert service, testimonials show whether your lawyer is a good fit for you, with past clients hitting on his or her strengths and weaknesses.
Finding the right land contract lawyer is essential to ensuring you have the best person possible to represent you and your case, which is why considerations like experience, local knowledge, and testimonials should all be part of your overall decision-making process when searching for a qualified attorney.
A land contract lawyer should have the proper amount of experience in the field and history of handling the types of cases that you have to present. This means a history of real estate cases, property purchases, and land contract disputes. It’s important that your lawyer has handled as many similar cases as possible, as this ensures that he or she is aware of the intricacies and nuances of such circumstances.
A local attorney is one who has a broad understanding of the area where the incident took place, oftentimes understanding the history of the properties, individual or land contract agreements made, and any history related to the specific property in question. A local lawyer will also have knowledge of the local court system, an integral part of determining where to take your case. When your attorney is familiar with the local system, he or she is better equipped to deal with the specific judge and court system, increasing your chances of a favorable outcome.
Reading reviews left by previous clients is a great way of determining whether or not your lawyer is a good fit for you or your case. Testimonials can reveal everything from how well your attorney communicates to debts represented successfully. It’s important to review as many testimonials as possible, and to look on multiple websites for feedback. Look for patterns and focus on those issues that are most important to you.
What to Ask a Land Contract Lawyer
For most people, meeting with an attorney is a relatively new experience. Certain questions are naturally raised by the process – such as what happens next, how long is the process expected to take and what is my role. For a land contract, there are even more specific concerns and questions that may come up at the initial consultation. All good attorneys review the nature of the case at the initial consultation. For a land contract case, this step is important because the attorney’s opinion about the case will be crucial in determining the course of action.
The following questions are especially important to ask at the initial consultation: Is land contract law one of your primary practice areas? Some attorneys work mainly in real estate law, and land contract is one of many subdivisions that may be addressed. Others focus specifically on land contract issues. At the initial consultation, be sure to ask how much case work involves land contract issues on a regular basis. What does the land contract process look like for your firm? The land contract law process can be complicated and resolving or enforcing a land contract can have different steps along the way. In addition to working through the land contract itself, an attorney may conduct the deeds as well, depending on the situation. Be sure you understand all the steps in the process. How long will the land contract process take? How long it takes to complete a land contract case will depend on many factors. The type of land contract case, whether foreclosure, eviction, eviction defense or monetary judgment, will all reflect on the type of case, as well as the complexity. In addition, if there are outstanding claims or disagreements, this can make the case more complicated and result in a longer timeline. Considering the possibility that your land contract case may take some time, you’ll want to ask the lawyer about their availability. Are you available when I need you? A land contract case may require several meetings over a period of weeks. Some clients will immediately require additional information about the land contracts in question; others may be content to wait until the date of the case to receive additional details. Be sure to get a good idea of the lawyer’s availability to meet and go over facts and issues. This is especially critical if your case is particularly complex. If your land contract attorney cannot meet your schedule, that could be an indication that you’ll need to look for other options.
Hiring a Land Contract Lawyer: Costs and Considerations
Clients frequently ask how much it costs to hire a land contract lawyer. The fee structure and overall price depend on a number of factors. This article focuses on the questions that are most commonly raised by our clients.
Land contract lawyers typically charge an hourly fee – anywhere from $150 on the low end, to $350 on the high end. A large factor that determines the rate is the billing lawyer’s geographic location – land contract lawyers in larger cities with a high cost of living tend to charge more per hour than those who practice in rural areas with lower costs of living.
In addition, the amount charged will depend on the type and amount of work required to complete the representation. A simple land contract for a home with low value (usually worth less than $100,000) and a purchase price between 10-20% of the home’s appraised value could be drafted in an hour or two. This translates to a total fee of $150-300, not counting time spent gathering information from the client and reviewing the land contract with the parties after it is completed .
However, an experienced land contract lawyer charges only for work actually performed. Suppose a buyer wants certain special features of the property included in the land contract, such as restrictions on modifications intended to avoid nuisance problems (such as parking a boat in the yard) or specific maintenance obligations. The land contract lawyer may need to spend some extra time determining the best way to address client requests. Similarly, if there are special legal issues, such as inheritance rights or confirmatory judgments, these should be spelled out very precisely in the land contract. It may take hours to draft a land contract that includes all of the seller’s and buyer’s requests. Despite this seemingly high fee, the total price is reasonable, especially because there is less risk of disputes arising over ambiguous provisions in the land contact.
An attorney should be able to give a detailed price quote that indicates the likely fees for specific tasks. If the attorney will not voluntarily provide a written fee agreement containing the detailed quote, you should walk away before wasting any more time.
Why It Pays to Work With a Local Land Contract Lawyer
When you are searching land contract lawyers near you, make sure to select someone who is knowledgeable about the real estate laws in your state and/or local community. Each state has its own set of real estate laws that dictate what can be done and what can’t be done when it comes to purchasing or selling a piece of property. There are specific provisions for both residential and commercial properties, and there are also specific laws for instances involving land contracts. A land contract is a legally binding document that outlines how a property is sold. It does not include a mortgage or an immediate transfer of ownership, but rather involves an agreement to make monthly payments until the selling price is met. Once this is done, the property is then transferred from seller to buyer. Although some people choose to write out their own land contracts, it is in your best interest to go to experienced land contract lawyers and have them draft and review the document. This is important because there are plenty of state laws and nuances that surround land contracts, and it is essential to ensure everything is accurate and in compliance with all applicable laws. The benefit of choosing local land contract lawyers is that they are going to have the best understanding of these state-specific real estate laws for your area. A lawyer’s knowledge of real estate laws in other states is irrelevant when it comes to land contract issues, which is one reason why it is so critical to choose someone with local expertise. This person is going to have a much higher likelihood of guiding you to success in land contract matters, as opposed to someone who does not know the local laws and has to spend time researching them.
Common Issues with Land Contracts
While land contracts can be great tools for investors, lenders, and owners even seasoned people can run into issues when buying or selling property like this. You also have issues if you need to enforce your rights to rent or payments from tenants or buyers of the property. Common issues include:
When buying something using a land contract, you will want to make sure that the property is what you thought you were buying. You don’t want to be the buyer that just found out the property you thought you were getting is actually worth a third of what you thought when the note comes due.
You also want to make sure you are paying the right amount for the property. Maybe the seller wasn’t as honest with you, or maybe they owe taxes or other debt on the property. You want to make sure that you don’t over pay for the property.
When enforcing your rights under a land contract you are technically a tenant with the seller as your landlord. However , you must pay them to stay in possession of the property and in order to get them out you must go to court to evict them like any other landlord.
Because land contracts are agreements they are often not drafted correctly or the terms are unclear. Either situation can lead to a dispute over your rights under the contract.
How using a real estate attorney can help you when buying, selling, or renting property even when a land contract is used is a good idea. You may be able to get out of a land contract, not pay more than you should, or even avoid costly litigation with the seller.
A lawyer will help you understand what rights come with a land contract. They will protect your interest by reviewing the contracts and making sure the terms are complied with. If you have a dispute a lawyer can help you.
It may be an expense upfront to hire a lawyer, but it can save you future money by ensuring you are getting what you agreed to and avoiding ultimately unenforceable agreements.
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