Does legal jargon make your head spin? Learn what seller financing is, how to create a land contract in Indiana, and how to create contracts and legal documents with DoNotPay. The answer is yes! Seller financing is becoming increasingly popular in the United States, and land contracts govern the terms of this transaction. For the twenty-four month term of the contract, [the seller] reserved the prerogative of a landlord to enter the premises, restricted the couple`s use of the property and conceded it due to the couple`s default as if they were tenants, and retained their “rent payments”. Taken together, these features are of particular importance for a residential lease. Thus, the agreement of the parties – a so-called hire-purchase agreement – is not a “contract for the purchase of rental housing” and therefore does not exempt from the validity of the articles of association under article 32-31-2.9-4 (2). Real estate contracts are a form of seller financing in real estate transactions. Sellers or sellers act as lenders and keep the deed as collateral, and the transaction is registered with city or city officials. Buyers or sellers make principal and interest payments directly to a seller. Buyers also pay property taxes and insurance, and are also responsible for repairs and maintenance.
Indiana`s law follows these basic principles, with some important optimizations. One of the biggest drawbacks that can arise with a land contract is when a buyer buys a property for which the seller always makes mortgage payments. In some cases, the seller`s mortgage may provide that the lender may require immediate payment in full if they no longer live in the house – in which case, the buyer may be forced to immediately increase the total balance if they wish to stay in the house. Be clear. If, as a seller, you want to be able to retain the property and simply evict a resident after he/she has not made the payment, then you should expect the court to treat the contract as an owner-tenant arrangement. If, on the other hand, you wish to sell the property through payments over time, the form and content of the agreement must clearly indicate that the transaction is intended to transfer ownership, and you must acknowledge that the equitable title and rights associated with it belong to the buyer. Impossible to have both. The format of a lease-to-purchase agreement, i.e. a land contract, is often ambiguous and places the owner in a hybrid role of owner and seller. Apparently, Rainbow`s development company drafted an agreement that was a combination of a lease and a land contract. She wanted the document to be classified as a land contract so that she would not have the responsibility of a landowner.
At the same time, the developer wanted to benefit from a lease in the early years so that he could easily chase the buyer away if he did not pay. Parties who enter into such agreements should pay attention to how their contract is characterized. The format and content of the agreement should be consistent in order to avoid confusion as to the rights and obligations of the parties. Not often the law will allow you to have your cake and eat it. Constructive hint, but.. In the Myers case, the seller retained the legal right to the property in question, which was reflected in the contractual agreement registered in the county registrar`s office. Therefore, under Indiana`s lis pendens law, the tenant was deemed to have taken constructive note of the action on the land contract against the buyer initiated two years before the lease in question. However, the court did not adopt the seller`s lis pendens argument, arguing that it “makes no sense” to say that a notice of lis pendens procedure should bind a tenant already in possession. To claim otherwise, a tenant in possession must “regularly review the records of the county registrar`s office to determine whether a foreclosure action has been filed.” What is the typical down payment on a land contract? Down payment and monthly payments Unlike the 10% down payment usually required for a traditional mortgage, down payments for land contracts range from 3% to 5%. For example, for a traditional mortgage, a home with a purchase price of $100,000 would require a minimum down payment of $10,000.
Superior mortgage. The Lunsford Court quickly waived the buyer`s priority claim of the land contract. Since the lender reserved his mortgage six months before the buyer registered the land contract, the mortgage prevailed. Since the lender made the buyer a party to the enforcement action, thereby giving the buyer the opportunity to assert its subordinated interest in the asset, the enforcement order of the court of first instance was conclusive for the buyer. The court upheld the summary judgment of the court of first instance in favour of the lender accordingly. Morale: Don`t forget to record. Do you have any other contracts you would like to enter into? For a small monthly fee, DoNotPay can create many documents for you. An accompanying note. Please note that the hereditary lease agreement has been concluded in accordance with the corresponding land contract. Thus, the Myers case refers to post-mortgage leases, not leases entered into before the mortgage was registered. It is my understanding that in Indiana, a foreclosure mortgage borrower typically acquires the real estate security that is subject to pre-existing and registered leases, whether or not the tenants are defendants in the lawsuit. Whether a foreclosure hypothecary creditor would acquire the property, which is subject to pre-existing unregistered leases, is a post-day question.
The problem. This brings me to today`s topic, last year`s Indiana Supreme Court opinion in Rainbow Realty Group v. Carter, 131 N.E.3d 168 (Ind. 2019). The decision is interesting and effective on several levels for non-traditional lenders, real estate developers and owners. However, for the purposes of my blog, and in particular today`s article, I will focus on the court`s discussion of whether the written agreement was a land contact or a lease agreement. Were the parties to the dispute the seller/buyer or the landlord/tenant? Unlike most land contract disputes, Rainbow`s buyers wanted the agreement to be a lease so they could claim damages. A land contract is a fairly simple concept. Basically, the seller finances the purchase instead of going through a mortgage lender. Instead of taking out a mortgage, the buyer agrees to make regular payments directly to the seller, who still retains ownership of the property.
Once the debts are settled, the seller transfers the property to the buyer, who then freely and clearly owns the property. The purchase of indiana woodland, hunting land, or farmland on contract can be done if buyers and sellers agree to fairly simple terms and requirements. .