The sale of real estate–buildings, land and immovable fittings –is subject to several considerations which do not apply to the sale of private property. Because real estate is expensive, a third-party financing entity such as a bank is usually included in virtually any sales transaction. It is possible, but for the seller to finance the sale of real estate. In this case, there is a property contract used.
Price
A property contract is normally used when the buyer does not have enough money for a sizable down payment and does not have enough credit to secure third-party financing. For this reasondown payments in property contract transactions are usually low, and sometimes non-existent. The seller frequently insists on a higher overall price in exchange for a reduced down payment. The lower the down payment, the higher the total price may be.
Payment Terms
Payments can be organised in a variety of ways. Equal monthly payments are typical. Somewhat less common are inverse down payments, also called”balloon payment,s” where the buyer pays a large payment at the close of the installment period in exchange for lower monthly payments throughout the term of the repayment period.
Possession and Title
At a land contract, the buyer is normally entitled to possession of the property as soon as the initial installment is sent to the seller. Title to the property, nevertheless, stays with the seller before the final installment payment is made, based on buyland.com. Following that, the seller is obligated to sign the title over to the buyer and abandon any further claim to the property.
Default and Penalties
Some property contracts provide that if the buyer defaults before all installments are paid in full, the seller can evict the buyer without paying a refund, according to the Standard Legal Law Library. In actual practice, in the event the buyer files a suit, courts can order the seller to repay to the buyer any difference between the amount of payments made and the reasonable rental value of their property. Default provisions must be clearly spelled out in the arrangement, so that the buyer, and a courtroom, will understand precisely what constitutes default and what the impacts are.
Housekeeping Matters
A property contract must clearly describe the land. A street address is deemed insufficient, because street names and numbers frequently change. Use the description listed in the property’s name document–normally either a plat number or a metes and bounds description. A plat number is a number assigned to the property by the local government. For larger properties, a metes and bounds method of measurement based on studying conventions is used to spell out the precise studied boundaries of the property. These descriptions can also be kept at the local property recorder office. It’s important to include standard contract”boilerplate” clauses such as dispute resolution, mission and severability (see Resources section).