Your title should reflect the contents of the agreement. For example, “Contract for a Deed” or “Land Sale Contract”. Provide an area for the parties to provide the date on which the agreement was created.
For example, “John Doe (“Buyer”) and Jane Doe (“Seller”) hereby agree as follows. ” Include the full address of each party to the contract.
The legal description of a property can be found in the most recently recorded deed or ownership affidavit. If you do not have a copy of the deed or affidavit, contact the Recorder’s Office in the county where the property is located and request one. The Recorder may charge a small fee for locating and copying the deed.
You may specify this information in an executed written addendum. Execute it in the same manner as you execute the contract for the deed to land: sign it and have it notarized.
Check with the County Recorder for a description of any easements on the property. The county should have a record of all easements for any property.
Liens and encumbrances may include mortgages or other loans where the property was used as collateral. They may also include unpaid judgments to which the property has been attached. [3] X Research source The full name and address of any creditors should be included.
For example, there may be limits on building any additional structures on the property, or on the colors a building can be painted. [4] X Research source Covenants are typically managed by a home owners’ association in the neighborhood where the property is located. Check with the association to find out if there are any covenants the buyer needs to know about. [5] X Research source
Monthly payments. Include the amount of principle, interest, and the total monthly payment, on what date it is due each month, and where payments should be mailed or otherwise delivered. If there is a final balloon payment due, describe it in this same manner. Interest. State the interest rate and describe how interest is calculated. For example, “Interest shall be calculated at a simple seven and one half percent (7. 5%) and shall be compounded annually. ”[6] X Research source Late payments. Describe clearly when a monthly payment will be considered late and what late fees shall apply. For example, “Payment is due on the 1st of each month, and shall be considered late if not paid by the close of business on the 15th of said month. A late fee of $25. 00 shall apply to all late payments. ”[7] X Research source Term of the contract. State when the payments will start and when they will end, as well as how many payments there will be. For example, “Payments shall be due beginning on the 1st of April, 2009 with a final balloon payment due on the 1st of May, 2019, for a contract term of one hundred twenty-one (121) months. ” It should be very clear when the contract begins, as the obligations it lays out will not be in effect until that date.
Maintenance. The buyer in a contract for a deed is generally responsible for maintenance and repairs to the property. A seller, however, may wish to include language that will allow him or her to come onto the property to make certain repairs if the buyer fails to make them in a timely manner. Property taxes. A seller may bill the buyer each year when taxes come due or she may include property taxes in the monthly payments charged. The contract should describe the method used, e. g. , “Property tax shall be the responsibility of Buyer and is included in the monthly payment amount. ”[8] X Research source Use of the property. The buyer in a land contract usually maintains the sole right to possess or be on the property, with limitations on the right to construct new buildings or demolish old ones. Meanwhile, the seller generally retains a limited right to use the property as collateral and allow liens to be placed against the property, to the extent allowed by state law. [9] X Research source
If the buyer is responsible, specify the amount of insurance required. [10] X Research source
Once the final payment is made, the seller gives the buyer an executed deed showing the buyer as the new owner of the land. Even though this is the standard procedure for legal ownership and title transfer under a land contract, you should spell it out in order to avoid any later confusion as to when title will be given to the buyer.
Right of acceleration. The right of acceleration is the right of a seller to call the entire balance of the loan due upon the failure of the buyer to make a monthly payment or comply with some other condition of the contract. Warranties. Many states allow a seller to sell property under a land sale contract without making any warranties to the buyer. Some may require an “as is” disclaimer when no warranty is being made.
This clause will prevent a party from later claiming that the contract does not contain what the parties agreed to. [11] X Research source
Your signature block should also include a place to enter the date on which the contract was signed by each party. This way it will be clear that the contract was signed after it was finalized, and has not been changed since it was signed.
It’s also a good idea to create an electronic copy as well, in case something should happen to the physical copy. Store your physical copy in a secure location, such as a safety deposit box or in a home safe.
