Land Contract Seller Remedy

Question: If a Land Contract Purchaser defaults on a Land Contract, what is the Seller's Remedy?

Dear Miller Johnson Schroeder,
I sold my property in Berrien County, Michigan, on Land Contract last year. Already, the Purchaser has failed to make payments and has failed to pay the real estate taxes. I no longer know if the property is insured. What can I do.

Answer: You have described a situation facing many property sellers. As bank financing has become more difficult to obtain and as it has become more difficult to find buyers, Sellers are choosing to sell their property on land contract. A land contract is where the seller becomes the lender to the buyer. But just as a bank is careful when you get a mortgage from the bank, the land contract seller must be equally careful or you can lose your entire investment. First you must immediately make sure the property is insured and that you are a "loss payee," "additional insured" or an "additional named insured" on the policy. Consult with your insurance professional to determine how best he can protect you. If the property should burn while there is no insurance, you will probably have lost all of your value in the home. Secondly, if a payment is missed, then you must immediately declare the buyer in default, just as a bank would. This is not a circumstance you can be nice. One of your greatest assets is at risk. Thirdly, you must make sure every tax payment period that the real estate taxes are paid. If the taxes are not paid, the taxing authority can sell the property for taxes and you will have lost all of your value in the property. These are very real problems.

Upon the default by the buyer you should immediately contact an Attorney. You can forfeit the land contract or foreclose on the land contract. The Lawyer’s at Miller Johnson Schroeder will guide you on your options. The majority of land contract defaults result in forfeiture of the land contract. In a forfeiture, the seller gets the property back and keeps all payments made. This is why a large down payment is necessary. Forfeiture of the land contract is a court procedure that takes about 4 to 5 months total. The other option is to foreclose the land contract. This method will take about 9 months to one year in court, but it also provides you with a judgment for money damages against the buyer. This is only warranted if the property is no longer worth the selling price and your buyer has asset sufficient to recover the judgement against.

Attorney: Mark A. Miller

Real Estate Law

Real Estate

Real estate law is a specialty area of law covering all the federal laws, local regulations and legal codes related to real estate, which is...

Read More

Business Law

Business Law

Business Law is a common name for the specialty area of law that is actually referred to as Commercial Law. The term Business Law describes and...

Read More

Corporations and LLC

Corporations and LLCs

Michigan Lawyers & Attorneys is ready to serve your legal needs when you are ready to set up your business as a Corporation or Limited...

Read More

Litigation

Litigation

Litigation is the legal process for resolving a civil or commercial dispute through the courts. It is defined as the act of bringing or contesting...

Read More

Probate Law

Probate

Probate Law is the specialty area of law that deals with the disposition of a person's estate after they have passed away. This is always a...

Read More

Estate Planning

Estate Planning

Estate Planning is the process of arranging your affairs for the orderly and tax efficient transfer of your assets to the beneficiaries of your...

Read More

Wills And Trusts

Wills And Trusts

One of the most important legal issues you have to address at some point in life is to set up your will, and when necessary a trust for your...

Read More

Tax Law

Tax Law

Tax Law is the specialized area of law that deals with the federal and state laws and regulations governing personal taxes and estate taxes...

Read More

Litigate Plan Protect


Our team of legal experts is here to help you navigate the complexities of corporate law, litigation, estate planning, and wills and trusts. With years of experience in these practice areas, we have the knowledge and skill to provide you with the legal guidance you need to achieve your goals.

We understand that every client's situation is unique, and we take a personalized approach to every case. Whether you need assistance with forming a corporation or LLC, representation in a litigation matter, or help with estate planning or wills and trusts, we are here to help you every step of the way. Trust us to provide you with the comprehensive legal services you need to protect your interests and achieve the best possible outcome for your case.

Share