Real Estate Law
Have Real Estate Law Questions? Ask a Real Estate Lawyer.
Basically this is a situation where the seller remains in the transaction as the lender and the buyer makes payments to the seller. Title is not transferred until the buyer makes his final payment and some land contracts state that if the buyer defaults, all payments shall be considered rental payments so watch out for this.
Typically there is a down payment and the buyer makes a set payment plus interest per month. The seller can just add up all the interest and add it to the remaining principle and divide it by the duration of the contract to get a set payment that includes principle and interest. This is preferable since it lets you know what your payment is going to be every month until paid off.
Under Ohio law, the Land Contract must be for a home and the property the home sits on, not just land. It can be for a mobile home only if the mobile home is affixed to (that is, a part of) the land.
Land installment contracts are regulated by Ohio Revised Code Chapter 5313.
Ok, typically even though the title has not transferred to the new owner, many courts still consider the buyer to be the equitable owner in the event of a default. With this large a down payment and this short a time frame and balance (800 x 12 x 2, or 19,200) a court would likely treat this as a normal borrower/lender transaction and require you to legally foreclose if the buyer defaulted.
Ohio law says every Seller must, at least once year or upon buyers demand, (but no more than twice a year), give a statement showing the amount paid in principal, amount
paid in interest, and the remaining balance owed.
The Seller must RECORD the Land Contract in the County Recorder's Office where the property is located within 20 days of signing, and it shall contain the legal description of the property. If the Seller does not record it, buyer should record it to protect his interest.
If the buyer defaults for 30 days or more you have to give them a 10 day notice that you are ending the Land Contract.
The notice must include:
1. an indication that there is a Land Contract and the address of the property;
2. a reason(s) for ending the contract; and
3. a statement that the Buyer has ten days to correct the problem.
This notice must be served by the Seller by handing buyer a written copy of the notice, by leaving it at the property which is the subject of the Land Contract, or by mailing it to buyer by registered or certified mail to your last known address.
After the ten-day notice period, the Seller can file court action if buyer has not corrected the default and complied with the contract. There are two (2) possibilities:
1. If the contract has been in effect for less than five years, or less than 20% of the principal amount due has been paid, and buyer has been in default for over 30 days, an eviction action against buyer can be filed just like a landlord evicting a tenant. If this happens, buyer could lose down payment. Buyer must receive notice as explained above first.
2. If buyer has paid under the Land Contract for five years or more from the date of the first payment, or has paid toward the purchase price a total sum equal to or more than 20% of the contract price, the Seller may recover the property only by use of FORECLOSURE and judicial sale of the property.
So the long and short of it is, you would be a normal lender in this situation. You would need to run an amortization schedule and figure out what the payments would be with principle and interest. The schedule will show how much goes to principle and interest each month. There are programs on the net for free you can get or any bank can run a schedule for you.
You would have to foreclose if the guy defaulted.
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).