I just agreed to a land contract?!

[Meredith Mihm]

We just shook hands on a 6-plex deal-- owner financing-- 185K, 37K down at 3.9%, 30 year amortization, 10 year balloon.  But he kept saying "land contract," and I didn't ask what he meant (face palm!!).  When we got back in the car, I realized that this is like contract for deed, which I have never researched properly.  I just assumed that it was the same thing as a Trust Deed.  

I'm googling feverishly, but I'll take all the help I can get.  There is no official written offer yet-- are there big disadvantages to land contracts?  I don't totally understand the idea of "equitable title," and what are the disadvantages of not holding the deed, etc. The property is in Wisconsin.

Thanks!! 

[Michael Redden]

@Peter Walther     This might be a fear for some, but it shouldn't be in Wisconsin. So long as the Land Contract is recorded, even a mortgage has been found to be junior to it. See: Fair Finance Corporation v. Roomates, LTD, et al., 2015AP728 (March 17, 2016).

There have been instances where a mortgage or other lien was allowed to attach to the Vendor's interest to allow the creditor to simply garnish the Land Contract payments.  That is also very common for the holders of any note or mortgage.  Far more common for private mortgages such as this, but something to also keep in mind if you invest in mortgages and promissory notes.

There are always outlier fact patterns, but a judgment creditor is not going to be able to jump priority like that in most cases and states.

Contracts for Deed and Land Contracts generally are most favorable to the seller in most states.  Wisconsin's laws are much more balanced though.