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What is a Land Sale Agreement?
A land sale agreement is a written legal contract used when purchasing real estate. This includes all types of real estate, including vacant land, homes, apartment buildings, commercial spaces, and other real estate properties able to be purchased. Also known as a land contract, these documents serve as a form of seller financing. Similar to a mortgage, land sale agreements allow property buyers to make payments directly to the real estate owner, or seller, until the property’s purchase price is fully paid off. Instead of borrowing funds from a lender or bank, buyers will contact the seller and pay off their newly purchased property.
Land purchase agreements are signed between the buyer and seller of a particular property once both parties agree upon the terms and conditions of the sale. When both the buyer and seller are satisfied of all contract terms, including payment structure and price of the property over a specified time period, the legal title of the property transfers directly from the real estate owner to the buyer by warranty of deed.
Land Sale Agreement Defined
As previously stated, a land sale agreement is a legal agreement between a buyer and seller of a particular property. The standard land purchase agreement stipulates the conditions of a sale, including that a buyer can take possession of the land even while the owner retains the lawful title to the property. Typically, both parties agree to a long-term payment schedule with plans to fully purchase the land. Once the buyer finally completes all financial installments, the seller conveys the lawful title of the property to the buyer.
On average, land contracts contain detailed descriptions of the property being sold, the agreed-upon purchase price to be paid by the buyer, the number of installments needed to fully fund the property’s sale, and other relevant details and terms. These agreements are vital when dealing with agriculture and farm land contracts; with a valid land purchase agreement, agriculturalists have the ability to farm large acreage of land without having to shell out the money to purchase the farming acres right away.
Since buying and selling real estate properties can be a tedious and confusing process, it’s vital to understand all the details of a property before making an investment in land. Land contracts help with that. Before a buyer and seller create and sign a land sale agreement, they thoroughly discuss the condition of the property, minute details, and terms beforehand. This eliminates mistakes, misunderstandings, and confusion. The use of legal-binding land contracts also helps buyers and sellers avoid costly disputes that arise from property transactions.
How A Land Contract Works
Valid land contracts are simple solutions to buying property without borrowing money from third parties. Once the property buyer makes his first installment payment to the seller, the buyer gains an equitable title to the land. As an equitable title holder, the buyer obtains actionable interest in the land. Consequentially, the seller is legally unable to sell the property to another interested party. In addition, the seller cannot implement a lien or encumbrance on the property that interferes with the buyer’s equitable interest in the land.
While the buyer gains equitable interest, the seller maintains the legal title to the property until the buyer issues the final payment. Once that final installment is approved and all other land contract conditions are met, the deed of the property will be transferred to the buyer. The seller must file with the appropriate government office, typically the County Register of Deeds.
If the buyer fails to make the land contract payments when they’re due, defaults on the land sale agreement, or breaks any other specified terms or conditions, the seller can file with the local courts. Sellers typically file a land contract forfeiture that results in the buyer giving up all money already paid to the seller, as well as the equitable title. Buyers unable to meet the terms of their land contract will not only lose the monthly payments made before forfeiting, they also lose any rights to the land.
Land Sale Agreement Benefits
As with all types of real estate financing, a land contract offers both pros and cons to the both parties involved. Buyers, for instance, benefit from the land contract’s ability to purchase a property even without the credit score and funds typically required. Some buyers are unable to obtain lender approval for a mortgage and rely on a land purchase agreement to gain equitable interest in a property they love. For the seller, offering land contracts opens of a bigger pool of potential buyers. The seller can also determine the terms and conditions of the contract to negotiate a higher purchase price. Often, this allows the buyer to pay the seller a large cash down payment upfront.
Agreeing to a land purchase agreement also has its disadvantages for both the buyer and seller. As previously stated, buyers may end up paying more in the long run for the same property with a land contract’s increased installment plan. If the buyer is unable to pay those premium monthly payments, they lose out on all of their previous installments and their equitable title to the land. Land contracts also require good communication between both the buyer and seller; if the relationship between the two suffers, it’ll be uncomfortable to maintain the monthly payments. On the other hand, sellers risk not being able to sell the property for more to another interested buyer once signing a land sale agreement. They also won’t be able to receive the property’s full purchase amount at the time of sale. For sellers needing money fast, land contracts would be disastrous.
Thanks to the wondrous internet, you can buy or sell land while at home in your pajamas. Vacant land and properties with structures can be found with a simple online search. There are numerous websites that offer online advertisements for buyers interested in land and sellers wanting to appeal to a plethora of potential buyers. Likewise, you can find printable land contracts to peruse within seconds. To better understand these essential documents, you can find land sale agreement templates and samples, including farm land sale contracts, on various websites.
Ready to Sell Your Land?
We’re serious land buyers who work in Spring Hill and surrounding areas, and we understand how stressful it is if you have vacant land that you can’t afford or don’t know what to do with it. No matter what condition your land is in, ROI Land Company LLC will work with you to make it a quick and simple sale!
If you have any questions about your land, or want to know more about the cash buying process, give us a call! We’re always happy to answer any questions. Call us today at 7863990803, or visit our website.