Structuring Deals #3: Land Contracts & Contract For Deed

Structuring Deals #3: Land Contracts & Contract For Deed

Hey, it’s Joe. This is video No. 3 of the zero down structure
hierarchy and in this one we’re going to talk about land contracts, or contracts for deed. It’s called the land contract if you’re in
a mortgage state. It’s called a contract for deed if you’re
in a trust deed state. Either way, they’re pretty much the same type
of document and you probably want to have an attorney that’s local to you draw up this
document because it has to be recorded, or it can be recorded, and you want to make sure
that it’s done properly for your particular state. And that shouldn’t cost you more than $200
or $300 to have an attorney draw that up for you. But, basically, it’s the same as if you were
buying a car using the bank, a loan from the bank. When you get a car the bank holds the title
to the car and then they have a document with you that says you’re going to pay X amount
of dollars over X amount of time at a particular interest rate and then when it’s paid off,
then the bank is going to transfer that deed to you and you’ll have the deed, or the title,
I’m sorry, of the car to you. That’s the same thing that’s going to happen
in land contract or contract for deed. The person who’s selling it to you is going
to hold the deed to the property. You’re going to make payments to them based
on whatever you agree upon. And once those payments are paid off, then
they’re going to transfer the deed. What I like to do is have that deed held in
escrow somewhere so that I don’t have to track them down when that payment, when I make that
last payment. But I don’t usually buy properties on land
contract. It’s not a bad way to buy, it still gives
you pretty good control. But it doesn’t give you the deed and you still
need that person who’s on the deed to sign the final deed. That’s why we try to put those things in escrow. Now, if you’re selling a property on land
contract, you don’t necessarily want to put it in escrow. You want to hold onto control. It’s, also if you’re selling on escrow, or,
I’m sorry, if you’re selling on land contract you don’t want to record your land contract. If you’re buying on land contract, you do
want to record the land contract because it solidifies your position. If you do want to buy on land contract, make
sure that you record the land contract. If you’re selling on land contract, don’t
record it if you can avoid it and just hold onto it. So if they default, you can just ask them
to leave and usually they’ll leave and you can tear up the land contract and it’ll be,
everything will be said and done. If you have to, if it’s recorded, you have
to get it removed from the County Recorder and you have to have a document signed to
do that. So, if you’re in a dispute with somebody who
you’re moving out, that’s sometimes difficult to get taken care of. So don’t put yourself in that position. Anyway, that’s what a land contract is and
I’m going to explain how that fits into the zero down hierarchy in a future video. All right. Let’s go on to the next structure, which is
lease option. And I’m going to do that in the next video. Thanks, now.

2 thoughts on “Structuring Deals #3: Land Contracts & Contract For Deed

  1. thx.. great stuff

  2. so i have to get an attorney for the contract or it is better than typing up the document up for me? and if I didnt have an attorney how would I go about typing this up and then recording the document?

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