Land Contract

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 1,838 reviews

Jump to Section

Need help with a Land Contract?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

What Is A Land Contract?

A land contract, also called a land contract agreement or purchase and sale agreement, is a legally-binding document used in the purchase of land, whether vacant or occupied by existing buildings or homes. It is a type of seller financing. Unlike a mortgage, the purchaser makes payments to the seller until the balance is paid in full.

If you need help drafting a land contract, it is best to speak with real estate lawyers. They can provide legal advice and guidance throughout the process.

Learn more about land contracts by checking out this article .

How Land Contracts Work

Under a land contract agreement, the buyer typically agrees to make a down payment and a promise to make periodic, routine payments on the balance’s remainder with interest. Depending upon the agreement, the monthly payment, term length, and interest rate can vary widely.

It is essential for buyers to keep in mind that they do not legally hold the property title until the balance is paid in full. They hold a deed of trust or equitable title to live on site or develop the property through a ground lease in the interim.

These are the steps involved with buying a property with land contracts:

  • Step #1: The property owner agrees to sell and finance a property to a buyer.
  • Step #2: The property owner works with real estate lawyers to draft a land contract.
  • Step #3: The parties may collectively negotiate the terms and conditions of the land contract.
  • Step #3: The property owner keeps the property titles and provides the buyer with a deed of trust.
  • Step #4: The buyer continues to make payments according to the terms and conditions of the land contract.
  • Step #5: The property owner and buyer clear the title from any applicable mortgages.
  • Step #6: The property owner titles the deed over to the buyer when the balance is paid in full.
  • Step #7: Both parties should retain documentation of the transaction for at least 7 years following it.

Some U.S. states use land contracts more often than others do. Both parties are encouraged to carefully consider the terms and conditions of the deal with property lawyers. Doing so may help you avoid future disputes and misunderstandings, primarily when you use a land contract agreement.

Here is an article about how a land contract works .

Meet some lawyers on our platform

Paul S.

7 projects on CC
View Profile

Bryan B.

55 projects on CC
View Profile

Jane C.

60 projects on CC
View Profile

Albert M.

2 projects on CC
View Profile

Typical Terms in a Land Contract

While the typical terms in a land contract can be reasonably standardized, it is critical that you have real estate lawyers complete a contract review before signing it. This strategy helps you avoid legal mistakes and common pitfalls. Doing so can also help you save money in the long run by avoiding disputes.

These are the typical terms in a land contract:

  • Name and address of all parties
  • A description of the property
  • Acknowledgement of the person who owns the property
  • Describe easements on the property
  • Include land contract limitations
  • Reference any liens on the property
  • Provide the property’s terms of use
  • Determine the terms of payment
  • Assign an interest rate with a land contract calculator
  • Ascribe how to handle late payments
  • Identify a contract start and end date
  • Assign party responsibilities and obligations
  • Clarify the terms of the insurance
  • Set the terms for transferring the property ownership
  • Include warranties and guarantees
  • Assert your right to acceleration
  • Insert state-specific clauses and terms
  • Provide a blank signature and dateline

After legally drafting your document, you can then arrange for a final signing with the buyer. Once signed, take a scan or photograph of the document, and disseminate copies to all relevant parties. You can also make hard photocopies that you can reference later in case disputes arise in the future.

Check out this article later for more information about the terms of a land contract .

ContractsCounsel Land Contract Image

Advantages of A Land Contract

Since a land contract is an alternative form of financing, there are advantages and disadvantages of using them. A traditional lender is not involved, which means that the buyer and seller should consider the terms carefully.

The advantages of a land contract include:

  • Advantage #1: There is no involvement of a traditional lender
  • Advantage #2: The seller gets to flexibly establish the terms and conditions of the sale
  • Advantage #3: The buyer can close immediately and counter with terms and conditions to the seller
  • Advantage #4: There are no lender requirements, which means that the closing costs are less under a land contract
  • Advantage #5: There are tax and income benefits for both the buyer and seller

As you can see, there are distinct advantages of land contracts. However, there are disadvantages that buyers and sellers should also consider. These risks may outweigh the reward depending upon your situation.

ContractsCounsel Land Contract Landscape Image

Image via Pexels by Pixabay

Disadvantages of a Land Contract

The most significant disadvantage of a land contract is the amount of risk both parties take on. Therefore, it is critical for buyers to carefully select sellers and vice versa. Any concerns should be taken up with property lawyers in your state.

The disadvantages of a land contract include:

  • Disadvantage #1: The title does not automatically pass to the purchaser in a land contract
  • Disadvantage #2: The seller could be held legally responsible for inspection issues with local or state authorities
  • Disadvantage #3: Forfeiture of a land contract by the purchaser is a fairly common occurrence
  • Disadvantage #4: It can take several months for the seller to resume control of the property in case of buyer forfeiture
  • Disadvantage #5: An existing mortgage supersedes a land contract, which can create problems for the buyer

If you are considering or contemplating buying or selling land through a land contract, real estate lawyers can help you draft a land contract agreement that sets clear guidelines and terms. They can also answer legal questions throughout the entire process.


Get Free Bids to Compare

Leverage our network of lawyers, request free bids, and find the right lawyer for the job.

Get Bids Now

Getting Help With A Land Contract

Whether you are facing a complicated or straightforward land contract deal, it is a wise choice to hire property lawyers to draft the agreement. Problems can arise at any given point. You will want to have an experienced legal professional on your side to help prevent them.

These are the ways that property lawyers can help you with getting a land contract:

  • Offering professional contract reviews for fairness and compliance
  • Providing legal advice when dealing with complicated land contract issues
  • Assisting sellers when dealing with liens and title searches
  • Handling a proper and lawful closing for both sides
  • Contract negotiation for the conditions and terms of the land contract
  • Preparing a closing statement for both parties

Property lawyers offer valuable advice and assistance when purchasing land or property through a land contract. They can also handle pressing questions related to costs or disputes.

If you choose to forgo your opportunity to work with property lawyers, it could result in future legal mistakes with negative ramifications. Avoid this critical mistake by hiring legal representation early on in the process.

Need Legal Help From Property Lawyers?

ContractsCounsel connects you directly with property lawyers in your state. Post your project for free and begin receiving proposals.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Land Contract Lawyers

ContractsCounsel verified
Managing Partner
24 years practicing
Free Consultation

Seasoned technology lawyer with 22+ years of experience working with the hottest start-ups through IPO and Fortune 50. My focus is primarily technology transactions with an emphasis on SaaS and Privacy, but I also provide GC services for more active clients.

ContractsCounsel verified
Founder
7 years practicing
Free Consultation

I am a California-barred attorney specializing in business contracting needs. My areas of expertise include contract law, corporate formation, employment law, including independent contractor compliance, regulatory compliance and licensing, and general corporate law. I truly enjoy getting to know my clients, whether they are big businesses, small start-ups looking to launch, or individuals needing legal guidance. Some of my recent projects include: -drafting business purchase and sale agreements -drafting independent contractor agreements -creating influencer agreements -creating compliance policies and procedures for businesses in highly regulated industries -drafting service contracts -advising on CA legality of hiring gig workers including effects of Prop 22 and AB5 -forming LLCs -drafting terms of service and privacy policies -reviewing employment contracts I received my JD from UCLA School of Law and have been practicing for over five years in this area. I’m an avid reader and writer and believe those skills have served me well in my practice. I also complete continuing education courses regularly to ensure I am up-to-date on best practices for my clients. I pride myself on providing useful and accurate legal advice without complex and confusing jargon. I look forward to learning about your specific needs and helping you to accomplish your goals. Please reach out to learn more about my process and see if we are a good fit!

ContractsCounsel verified
Contract and IP Attorney
4 years practicing
Free Consultation

I am a NY licensed attorney experienced in business contracts, agreements, waivers and more, corporate law, and trademark registration. My office is a sole member Law firm therefore, I Take pride in giving every client my direct attention and focus. I focus on getting the job done fast while maintaining high standards.

ContractsCounsel verified
Attorney
26 years practicing
Free Consultation

A twenty-five year attorney and certified mediator native to the Birmingham, Alabama area.

ContractsCounsel verified
Attorney/Owner
11 years practicing
Free Consultation

I absolutely love helping my clients buy their first home, sell their starters, upgrade to their next big adventure, or transition to their next phase of life. The confidence my clients have going into a transaction and through the whole process is one of the most rewarding aspects of practicing this type of law. My very first class in law school was property law, and let me tell you, this was like nothing I’d ever experienced. I remember vividly cracking open that big red book and staring at the pages not having the faintest idea what I was actually reading. Despite those initial scary moments, I grew to love property law. My obsession with real estate law was solidified when I was working in Virginia at a law firm outside DC. I ran the settlement (escrow) department and learned the ins and outs of transactions and the unique needs of the parties. My husband and I bought our first home in Virginia in 2012 and despite being an attorney, there was so much we didn’t know, especially when it came to our HOA and our mortgage. Our real estate agent was a wonderful resource for finding our home and negotiating some of the key terms, but there was something missing in the process. I’ve spent the last 10 years helping those who were in the same situation we were in better understand the process.

ContractsCounsel verified
Principal and Founder
8 years practicing
Free Consultation

Samantha has focused her career on developing and implementing customized compliance programs for SEC, CFTC, and FINRA regulated organizations. She has worked with over 100 investment advisers, alternative asset managers (private equity funds, hedge funds, real estate funds, venture capital funds, etc.), and broker-dealers, with assets under management ranging from several hundred million to several billion dollars. Samantha has held roles such as Chief Compliance Officer and Interim Chief Compliance Officer for SEC-registered investment advisory firms, “Of Counsel” for law firms, and has worked for various securities compliance consulting firms. Samantha founded Coast to Coast Compliance to make a meaningful impact on clients’ businesses overall, by enhancing or otherwise creating an exceptional and customized compliance program and cultivating a strong culture of compliance. Coast to Coast Compliance provides proactive, comprehensive, and independent compliance solutions, focusing primarily on project-based deliverables and various ongoing compliance pain points for investment advisers, broker-dealers, and other financial services firms.

ContractsCounsel verified
Chief Legal Officer
14 years practicing
Free Consultation

Experienced General Counsel/Chief Legal Officer

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call