Land Contract

[Ahkisha Howard]

Hello everyone I just have a quick question. I am in Indianapolis and this may be a question for a local Real Estate Attorney, but when doing a land contact where I am basically the Mortgage Company for someone, when they default do I file foreclosure or take them to eviction court. Or is both an option? Any help is great... thanks

[Bill Gulley]

I wouldn't bother going to an eviction and you may have more issues than you think speaking to a judge!

You need an attorney and go with a foreclosure, that's because they have been making repairs, that provides them with an equitable interest along with the payments they made. 2 years ago Dodd-Frank was here, so who did that installment sale? Don't know the circumstances of any exemptions for you on that front.

BTW, options do not convey any interest in real estate, but they do in the contract. Most think they simply evict, the option cannot require performance or it is considered an installment sale, foreclosure is then required. That's how investors get into wrongful foreclosures too. The option still remains after they leave the lease by whatever happened until the term expires. 

Another issue, many states have adopted 10% as an equity established by a buyer regardless of the strategy you are selling under, and that threshold requires a foreclosure. 

Things just aren't done like they use to be prior to our new regulations, so you'll be better off seeing an attorney before trying the DIY stuff of yesteryear. :)