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Land Contract

Land Contract - An agreement for the sale of a property in which the buyer takes possession while making payments to the seller, but the seller holds title until full payment is made. This type of financing is usually done for people who have less than perfect credit and are having a hard time getting financed for a home loan. Consult your mortgage professional to explore all options.

Include a clause in the land contract that allows you to prepay the contract amount without penalties. This allows you to improve the property and pay off the loan early or at the time of resale. If the seller does not agree to prepayment terms, negotiate a release clause that permits you (the buyer) to subdivide and sell lots while allowing the seller to release the land to the lot buyers and accept the money from lot sales as installment payments.

Review the terms of a land contract with a real estate attorney or agent before making or accepting any offers.

Because income from the sale of land is taxed as ordinary income, many sellers prefer receiving payments in installments through a land contract instead of receiving payment in one lump some.

Most land contracts are for a specified period of time such as two or three years. After that point you must refinance or payoff the loan in full.

Land Contracts are also known as a Contract for Deed.

Land contracts are great where you have the ability to purchase a tract of land that is zoned let's say for agricultural, and you are able while under contract to have the land rezoned for multi-family or commercial use. The will greatly increase the overall value of the land and give it a much higher lendable value. This technique is used successfully quite a bit by developers and speculators.

Another term used for a land contract is an installment purchase contract.

For more information regarding this topic, please call Mike Williams at 516-921-9000 or email