Risks of land contracts

[williamlpr]

What is the name of your state (only U.S. law)? MI

What risks would I take on a land contract -- as far as the other person I'm dealing with? (Besides the typical risks based on me like not being able to pay someday.)

At first glance, the idea of a land contract sounds scary to me, because how do I know that I won't be paying on the land contract for a while, and something in the other party's life would take the house away? Like, what if the other party defaults on their mortgage? Can't their mortgage company take "our" new house away? What if the other party loses a lawsuit or has unpaid taxes that the government goes after them for? Couldn't they take "our" new house away?

[nextwife]

Originally Posted by williamlpr

What is the name of your state (only U.S. law)? MI

What risks would I take on a land contract -- as far as the other person I'm dealing with? (Besides the typical risks based on me like not being able to pay someday.)

At first glance, the idea of a land contract sounds scary to me, because how do I know that I won't be paying on the land contract for a while, and something in the other party's life would take the house away? Like, what if the other party defaults on their mortgage? Can't their mortgage company take "our" new house away? What if the other party loses a lawsuit or has unpaid taxes that the government goes after them for? Couldn't they take "our" new house away?

• Vendee's title policy. Any adverse matters that might "attach" SUBSEQUENTLY would be subject to the Vendee's interest.
  
• I would not do an LC unless the seller was free and clear, most LCs would be contrary to the Due on Transfer clause of the underlying mortgage.
  
• Attorney review.
  
• Record the LC.
  
• And set up a private property tax escrow account that both party's must sign to withdraw. That way both party's are assured the property taxes are being paid.

[HomeGuru]

There are many more but an important factor is the due on sale clause in the mortgage.