Does A Land Contract Need To Be Notarized?
Does A Land Contract Need To Be Notarized?
Contracts are enforceable without a notarization. Land sales merely require written agreements that are explicit enough to spell out what is being transferred and for how much, and who is buying it.
If the contract is notarized, then it is more likely that the buyer and seller can benefit from the legal protections outlined in their agreement.
Notarization of a land contract means it officially becomes real, like a deed. Any purchase or sale of real property in the state of Michigan must be recorded in the county public records and secretary of state.
Notarization prevents potential confusion between the buyer and seller on the change of ownership.
How Do I Write A Contract For Sale Of Land?
The process for writing a real estate contract is the same as writing a house purchase contract. Use standard lease forms, such as an “as is, where is” clause and an “incorporated assumptions” clause.
It’s important to mention that your agent must be involved from the beginning of this transaction because he or she will help you prepare the contract and arrange for necessary closing costs.
The land sale agreement must contain;
- The title of the document, i.e. LAND SALE AGREEMENT, or a similar term
- Date of the agreement-the date the agreement was reached between the buyer and seller, including the signature of both parties
- The seller’s name and address are used to ensure that the seller will receive any payments due to them, which they can then send to their attorney.
- The buyer’s name and address-this provide a secure way to send the buyer payments or to keep them informed of their options.
- Description of the land (property), including plot and block number, location
- Selling price-what will the seller receive from the buyer, and how much security is needed from the seller.
- Signatures of the buyer and seller-this must be witnessed to be legally binding
- Witnesses-judges and other persons whose duty it is to witness a document.
What Is A Land Contract Example?
Landon is the seller, and he wants to sell his land to Blake for $10,000. In addition to cash, Landon requires that Blake put a deposit of $5,000 down as well as make additional 5 monthly payments of $1,000 each. Blake agrees.
Once Blake pays Landon the $10,000 in full, Landon signs over the property’s deed to Blake. The deed is then signed by both parties, and the witnesses are then to give their copy of the deed to Landon’s lawyer, who transfers the title in the seller’s name. The buyer and seller then sign their contract. This completes the sale of land.
What Is The Difference Between A Contract For Deed And A Land Contract?
A contract for deed, also known as a land contract or contract for sale, is a financing choice for purchasers who do not meet the requirements for a mortgage loan to acquire property. Similar to a mortgage business in a more conventional mortgage scenario, the seller in a contract for deed finances the acquisition of the property.
The property seller ensures that the proper amount of money will be paid for the property by requiring a down payment and monthly payments, sometimes with an option to buy out the contract for deed at any time.
Like a mortgage, if the buyer does not make all required payments, the seller retains ownership of the property and continues collecting rent.
The contract for deed differs from a conventional mortgage in that the seller does not receive any interest, nor is there any guarantee by the lender that if financing is obtained, the buyer will actually be able to purchase the property.
The lender requires the seller to demonstrate all of their assets, liabilities, and income to qualify for a loan.
Does A Land Contract Have To Be Notarized In Michigan?
In Michigan, the land transaction must be signed in front of a notary public. The land contract should be copied for your records, and the original should be sent or delivered to the relevant register of deeds office.
The notary also signs the land contract. The notary record is later used as evidence if any disputes arise regarding the purchase of the property.
If you have any additional questions about land contracts or land sales in Michigan, please do not hesitate to contact one of our attorneys at our office in Lansing, Michigan.
How Long Can A Land Contract Last In Michigan?
The length of the contract is negotiated between the buyer and seller. In Michigan, a land contract may last for two to four years. The majority of land contracts call for a down payment of 10% or more of the purchase price from the buyer.
The vendor will then be required to pay in installments over a predetermined time, with interest accumulating over the contract term.
What Is A Vacant Land Contract Florida?
A Florida land contract is a legal instrument that establishes the terms of a purchase of vacant land. It lays out the purchase price, the number of acres, and the contingencies for closing. It also lays out the terms of payment and the time frame for those payments.
The purchase price and any other financial circumstances related to the transaction should be taken into account by both parties because a land contract is not a contract of sale. The issuing of a Certificate of Title proves the property has been transferred, but the buyer still technically only holds a lease on the property.
Under this type of financing, the purchaser cannot gain full ownership until all payments are made in full and do not have any security to fall back on if he or she cannot meet terms.
A blank land contract form from most real estate offices will provide basic details about the transaction. It can be filled out by hand or with software and saved for future reference in case there are any disputes concerning payments made or services rendered.
What Happens When Land Contract Is Paid In Full?
When the final payment is received, and all of the land contract terms have been satisfied, the deed to the property will be filed with the relevant government office, such as the county registrar of deeds, designating the buyer as the new owner of the property.
The title company may also be involved in finalizing and transferring the property, especially if it is a more complicated transaction involving multiple parties. The seller may also be required to send a closing statement for the buyer to review, similar to an appraisal for traditional mortgage transactions.
What Are The Pros And Cons Of A Land Contract?
A land contract has benefits for the buyer in that:
- It gives them an ownership stake in the property, which helps them establish their credit history and swiftly increase the value of their investment.
- The down payment is used in the initial purchase price, and so any payments are installment-based with interest accruing every month.
- The buyer also gets to maintain the property for as long as they want–longer than a conventional mortgage that has a date certain for when it must be repaid.
- Land contracts may provide more flexibility in how the transaction is structured–allowing the buyer to choose which lenders they work with and what program best suits their needs.
How Does A Land Contract Work?
A land contract is a legal agreement between two parties governing the sale of a piece of real estate. The contract is typically in written form, includes a detailed description of the property for which the contract provides, and may also include any other terms desired by the buyer and seller.
The Buyer will typically pay a down payment to the Seller, which is known as earnest money. In some cases, the purchaser will make additional payments over time to cover any contingencies. The title company may be involved in the transfer of title following payment in full to ensure no one disputes or delays the final transfer of ownership.
To make sure that a land contract is enforceable and binding, it must be entered into before specific conditions are met. The actual sale of real estate is not guaranteed by this kind of transaction, though it can act as a partial indemnity against various risks associated with buying real estate property.
Is A Land Contract Good For The Seller?
A land contract is typically good for the seller because it greatly increases the selling price of the property through a steady stream of incomes. In addition, many sellers will receive a higher offer without having to compromise on important terms such as location, size and condition of the property.
The Buyer benefits from a land contract in that:
- There is no down payment for a house, so there is no mortgage to pay and little risk of defaulting on payments.
- The buyer does not need part-payment or partial payments spreading out over time, which reduces risk and interest expense since the lender will not have adequate collateral to loan out in a cash down scenario.
- Although the house is transferred to the buyer by deed of sale, in most cases they are essentially renting the house from the seller instead of becoming its owner.
This allows them to take advantage of existing amenities such as indoor plumbing and heating systems.
- The seller makes significantly more money than in a conventional real estate agreement where sale proceeds are split between lenders and seller as a commission for providing financing.