Land contract

[Shanequa J.]

If I buy a property with a land contract then a title company holds the contract and title, is this a way to protect me in case the seller gets sued or refis the house? If not, is there any protection for the buyer with a land contract?

[Jon Holdman]

If the land contract is properly recorded, which should be done, then the seller won't be able to refinance the property. The title company doesn't hold the contract or title. Title to the property stays with the seller, but the new land contract gets recorded. That's creates a change in ownership that prevents the seller from in any way encumbering the property.

If the seller owns it free and clear, why not just a simple seller financed mortgage? That gives the buyer clear title where a land contract does not. If you do go down the land contract route, I would strongly suggest you have a lawyer of your choosing review the contracts and the transaction.