I have just been contacted about selling my condo via land contract. The home has been up with a realtor for over a year and traffic has been slow even with three price drops netting a $20k reduction in asking price.
The place is in Ohio.
Specifically, this is the place.
http://www.danberry.com/property/7280069/29311_Bates_Perrysburg_Oh_43551
Time for me to start researching land contract.
What knowledge or direction can y'all provide?
Generally, it is a better deal for the seller. The buyer is taking lots of risks that the seller can deliver good title at the end of the contract. Risks such as tax liens, judgment creditors, bankruptcies, divorces. In other words, those types of things that happen in life over a long period of time. Usually a buyer wouldnt consider unless he has so many issues himself that he has no other choices. I dont know Ohio law but get the contract reviewed by a competent real estate lawyer. YMMV
Is this like a "wraparound mortgage?" I have never heard of a single one of those that went well for the buyer. I have heard of many where the buyer lost everything. I think they were pretty much never done in the past 10 years of "seems to be breathing" as the main qualification for a mortgage. Maybe they are coming back.
I grew up in Ohio, and have heard of these. Long time ago, though. As I remember, buyer makes payment on property for a certain length of time and then gets a real mortgage or pays the balance off. Sounds a lot like a lease option.
If you have an existing mortgage it is illegal to do a land contract or wrap around mortgage as it is more commonly known without the permission of the underlying lien holder.
They may allow you to do it, but I would be very surprised if they did.
By giving someone an "ownership interest" in the property the original lienholder can call the note due.
That's true, if you have a lienholder then you can't transfer any percentage of ownership to any other entity without their prior express consent. The only exception is a tax lien or similar.
Rent to own is where the original owner (meaning the person who is the mortgagee) of the property rents it and applies part of the rent towards a down payment. The original lienholder (mortgagor) can grab the property back if the payments fall behind, boot out the tenant and not owe them a dime. The mortgagee owes the tenant any refund, but good luck with that.
Land Contract may have been used in the layman's generic form and rent to own may more be what the buyer is considering. I hope so because I do have a mortgage which would make land contract impossible.
Rent to own is also a transfer in ownership interest but is less likely to be found out since you don't normally file them of record. Now if payments begin arriving from another party of the seller and buyer get into a fight and the buyer starts trying to assert their rights then that can also lead to a quickie foreclosure.
Did I mention there's a ton of legal liability to accrue to the Seller if a land contract/contract for deed/rent to own loan should get called for foreclosure regardless of the reason. The laws have moved on from the Rockefeller era where that type of thing was common. The buyer is protected way beyond you.
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