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I want to buy a house on land contract. How do I protect myself from being ripped off?

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February 14 2011 - Detroit
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Answers (5)

Land Contracts or Contract for Deeds are always risky.

In Texas, a few years back, the burden was shifted to the seller because so many people were losing their homes under this type of arrangement.

You can't really protect yourself, you are strictly depending on the seller to 
live up to the contract, some will, but many will not be able too.

Your only recourse is to sue the seller for damages, but this is not cheap.

Weigh the odds of the contract vs rent, see what you think if the deal falls apart later.

Good Luck!

James Callas - Realtor®

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February 26 2011
I would suggest using a Buyers Agent to assist in the transaction, close with a title company and make sure the contract is recorded with the county. You need to make sure there is no mortgage existing as there is a " due on sale " clause within their note. An attorney to review and assist is always a good idea.
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February 25 2011
it would likely be better to do a purchase with owner carry.  talk to an attorney.  the difference being that you do a title transfer up front and title search etc and can get title insurance.  otherwise, all you get with the land contract is equitable title- if there is a title issue you're not even going to be finding that out until you've finished paying- they still have title and can still cause title issues on the property until that last day so even if you do a title search now and it's clear, without a transfer you still have a lot of future risk.  sure there is a contract - you could sue them for breeching but you can avoid all that by buying it now and just doing seller carry of the note.   - do a closing now, title transfer now and the previous owner is like a bank- but not the owner.  you pay taxes , etc, you own it.  
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February 16 2011
Don't do it...as it is usually not in the buyer's best interest.
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February 16 2011
If you are not working with a realtor, I suggest having an attorney prepare or review the contract. You should also have a title company assure there is a clear title, the person your are purchasing the house from is the owner and to record the proper documents with the county.
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February 15 2011
 
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