How to Close a Land Contract

When it comes to purchasing property, you may come across a situation where you want to buy the property using a land contract. A land contract is an agreement between the buyer and the seller where the buyer agrees to make payments to the seller in installments until the full purchase price is paid. Once the purchase price is paid, the buyer will receive legal ownership of the property. In this article, we will discuss how to close a land contract.

1. Verify the terms of the land contract

The first step is to verify the terms of the land contract. You need to make sure that all the terms agreed upon by both the buyer and the seller are documented in the contract. Typically, the land contract should include details such as the purchase price, the payment schedule, and the duration of the contract.

2. Conduct a title search

Performing a title search is crucial to ensure that the property is free from any liens or encumbrances. A title search is a process of examining public records to confirm the ownership status of the property. The title search should be conducted by a professional title company or a real estate attorney.

3. Obtain title insurance

Title insurance is essential for protecting the buyer`s investment in the property. It protects the buyer from any claims against the property that may arise in the future. The title insurance should be obtained from a reputable title insurance company.

4. Coordinate with the seller`s lender

If the seller`s lender has a mortgage on the property, it is necessary to coordinate with them to ensure that the mortgage is paid off before closing the land contract. The seller`s lender will need to provide a payoff amount, which will be included in the closing costs.

5. Prepare the closing documents

Closing documents will need to be prepared detailing the terms of the land contract, the payment schedule, and the legal description of the property. These documents will be signed by both the buyer and the seller, and the payments will be made according to the agreed-upon schedule.

6. Closing day

On the closing day, both the buyer and the seller will need to be present to sign the closing documents. The seller will provide the buyer with the keys to the property, and the buyer will make the final payment. Once all the documents have been signed and the payments have been made, the buyer will receive legal ownership of the property.

Closing a land contract can be a complicated process, but following these steps will help ensure a smooth and successful closing. Make sure to work with qualified professionals, such as a title company or a real estate attorney, to guide you through the process and protect your investment.