land contracts and seller financing

[Tom Bell]

I have a couple questions.  One seems extremely simple, but here it goes.  Is seller financing and land contracts the same thing?  Next is closely related. I am looking at a 16-unit to buy and the owner wants to do a land-contract rather than me getting a mortgage and paying him for the property.  Should I avoid Land Contracts?  I have heard they can be dangerous or risky

[William Hochstedler]

These are also called Contracts for Deed and are one form of seller financing.

It works similarly to a car loan where the seller/lender remains on title until it is paid off.  It is one of the oldest instruments around and institutional lenders will recognize it as a form of ownership and allow you to refinance out of it.

To protect from all the very valid concerns that @Steve Vaughan expressed, definitely run it through an escrow service.

The primary risk is that you could be evicted like a tenant instead of foreclosed on like a borrower.  This is why it's important to talk to an attorney in your state who is well versed in this instrument and associated case law.  Because, if evicted, you will need to rely on the courts to consider your equity.

I work with some sophisticated investors and attorneys here (Utah) who have no problem with this instrument if it's the way to get the deal done.

Good luck