Land contracts

[Chris Armistad]

Hello BP, Need some advise on how to properly fill out a land contract. Is the deposit amount required added to the sell price of the home when I'm trying to flip it. Any advise about this process would be greatly appreciated. Thanks

[Jon Holdman]

I'm familiar with land contracts but have never used one. They're something of a no-mans-land. Not a mortgage, not a lease. State laws vary widely.

Like any form of transfer they violate the due on sale clause in the underlying mortgage. So, the seller is at risk of ending up with credit issues or a foreclosure if the end buyer doesn't perform. And the end buyer is at risk if the lender calls the loan.

What's your role in the deal? Sorry, but this sounds like a result of some guru seminar promoting complicated transactions where you are getting a fee for putting together a deal. If anything goes wrong in this deal, and there are lots of ways it can, you're the one everyone else is going to come after in court.