Land Sale Agreement
A land sale contract is a transaction more commonly referred to as buying a house on contract. This sort of transaction is a popular means of purchasing a home with alternative financing. The purchase might be a residential house, a commercial building, or a family farm. No matter what type of property you may want to purchase, chances are someone is willing to sell you that type of property with owner financing.
Essentially, the buyer signs a contract with the seller agreeing to purchase the property for an agreed upon price and make payments over time to reduce the balance. Generally such a contract would include interest at a stated rate. The buyer holds the title as security for the obligation of the purchaser. If the purchaser fails to make his or her payments on time, the Seller may declare a default.
One way that a land purchase agreement differs from a more conventional purchase is that in a land sale agreement the Seller may simply evict the Purchaser upon default and take back the property. However, this option becomes less likely the more vested the Purchaser becomes. Taking the property back after default is referred to as a forfeiture. Indiana Courts abhor a forfeiture and they will only enforce a forfeiture provision when certain criteria are met. Despite what the land sale agreement may say, Courts will not typically enforce a forfeiture provision if the Purchaser has paid a substantial amount toward the purchase price. If the court determines that the Purchaser has breached his land sale agreement, but that he has paid substantial sums toward the purchase price, the Court will require the Seller to use the foreclosure procedure, which requires the Seller to declare default, prove the breach, obtain a judgment, provide the statutory notice of sheriff sale, then sell the property at public auction. The purpose for this procedure is to insure the property is sold for the highest and best bid. Theoretically, this procedure is designed to pay any excess sale proceeds to the defaulted original purchaser of the property in order to insure that the Seller does not end up with a windfall profit.
As with any other real estate transaction like a land purchase agreement, there are certain implied warranties that may go with the sale of the property, unless they are expressly disclaimed. Indiana law prescribes the precise procedure for disclaiming such warranties. Any buyer or seller engaged in a land sale agreement should understand the general principals of implied and express warranties, such as the implied warranty of habitability, the implied warranty of merchantability, the implied warranty of fitness for a particular purpose, before entering into such a contract.
Default provisions in a land sale agreement are crucially important. Beware that there are unscrupulous scam artists running about the world who perpetrate very sinister plots by using strict default provisions in a land sale agreement. This is how they typically work. The Seller of a house (an unscrupulous swindler) sells his house to a willing Purchaser (an unsuspecting rube) for what appears to be a reasonable price. The Purchaser agrees to pay the Seller a significant down payment, which the Seller agrees to use as a down payment on the house. The Seller also puts some language in the land sale agreement stating that upon default, the down payment money is to be kept as liquidated damages. The minute the Purchaser fails to comply with a provision of the agreement, the Seller declares Purchaser in default and evicts him from the premises. Purchaser loses his down payment and the Seller keeps the down payment and starts the scam all over again. To protect yourself you should contact a real estate lawyer to help you through the process. Call McNevin & Schiff and we can help you.
Don't fall prey to this type of swindle. Hire real estate lawyers to represent you with a land purchase agreement. if you are negotiating a land purchase agreement to make certain that the terms are fair and that you are not getting in over your head.
A more detailed description of each type of Real Estate issues can be found through the links below:
Landlord Tenant Disputes
Real Estate Representation at Closing
Contract for Deed
If you're ccomptemplating a land sale purchase, you need experienced real estate lawyers to help guide you through the process. Call us at McNevin and Schiff.
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As a firm with experienced real estate lawyers, we serve the central Indiana area, including the communities of Indianapolis, Beech Grove, Speedway, Carmel, Noblesville, Fishers, Geist, Oaklandon, Greenfield , Greenwood, Whiteland, Mooresville, Plainfield, Brownsburg and Zionsville.
Land Purchase Agreement