Unique Land Contract Idea...

[Darrin Wesenberg]

Hey all, I thought I'd seek the advice of people much smarter than me regarding this potential scenario...

I recently came across a property in an up-and-coming area, where the current owner is a mentally handicapped older gentleman who inherited the property from his father and is tended to by a live-in caretaker.  The house needs some TLC and they cannot really afford to pay for upkeep or repairs.  He is about 8 years behind in property taxes and neither the owner nor caretaker are in any financial situation to pay them off.  He has been taken advantage of his entire life by other family members so he has nobody to turn to for help.  If someone doesn't clear that tax balance soon the county is going to foreclose on his property and he will be kicked to the curb (I don't know how it hasn't happened already, frankly).  I really want to buy the property, but have no desire to move into it, and would prefer to let him continue living in the house he has called home for years.  I was trying to come up with a creative way in which I buy the property but let them continue to live there without having to charge them rent.

I realize that in a typical Land Contract, the buyer makes a down payment to the seller, occupies the property, makes monthly payments to the seller, and obtains ownership after say 5 years.  In this situation, could we set up a Land Contract such that my down payment would be used strictly to pay off the property taxes, and my monthly payments to the seller would essentially be equivalent to what I would charge a tenant to rent?  So basically my monthly payment to the seller would be offset by his monthly rent to me, so no money would ever be exchanged.  I would take care of property taxes and insurance, make repairs, and after 5 years obtain ownership of the property, without actually paying the seller, and without the seller paying me rent.  

Benefits for me: I own the property in 5 years, free and clear, only having to pay off property taxes and making some repairs--by that time I'm predicting the neighborhood will have appreciated quite a bit

Benefits for the seller & caretaker: outstanding tax debt is washed away, a huge weight is lifted off their shoulders, and they can continue living in the house for another minimum 5 years without having to pay a dime

I'm still quite the noob at the whole REI game, and it sounds really weird but it seems like a win-win for both of us. But I still feel like I'm missing something. Has anyone ever been in a situation like this? Would I be the landlord to the seller while we are in the land contract, and be responsible for example if the furnace breaks. Would I be crazy to fix this place up for them without even living in the property, and not owning it for another 5 years?

And obviously I would seek legal assistance with all of this, I just wanted to get some feedback from BP first before presenting my proposal to the property owner or consulting an attorney.  Thanks and look forward to hearing everyone's thoughts...