How do I get out of my land contract purchase? (balloon payment, real estate)

jones1999 · 03-18-2009, 07:10 AM

I purchased a home on land contract in 2007 with the agreed upon terms of securing a conventional mortgage in 2010. I can clearly see that I will be unable to secure a conventional mortgage. I would like to leave the home this Summer. I have indicated to the primary homeowner that I don't forsee being able to secure a loan, especially now that the lenders criteria may be even stricter. I'm wondering if I am contractually obligated to stay til the term date of said agreement or can I terminate contract sooner?

Bydand · 03-18-2009, 07:14 AM

Seek professional guidance, not internet forum guidance, to be sure in your situation. I would THINK it would be the same as a regular loan/mortgage you cannot complete, but that is just a guess

Dr.Jim · 03-20-2009, 12:39 PM

Your description of the contract seems rather vague.
Are there any other stipulations in the contract? If it is 100% written that you WILL get a mortgage by 2010 as a means to fully satisfy the contract, then there seems as if there is no condition. Meaning you owe for the contract regardless of whether you can or cant get one. You "purchased" the home. You arent "going to purchase" it in 2010. You already did. Whats in question here is how are you going to pay for it? Via a conventional mortgage secured by 2010? OR some other way?

This will all come down to the language in the contract as to how much (if any) wiggle room you may have. Get a lawyer asap.

Compression · 03-21-2009, 11:42 AM

Agree, that you need to get an attorney to advise you ASAP. However, if there is nothing written to the contrary, and the numbers can be worked to everyone's satisfaction, you might be able to find somebody willing to "assume" your land contract. You may find it possible to at least get yourself out of the hot water, and possibly even with a couple bucks in your pocket.

trinkit · 03-22-2009, 08:01 AM

Also, you may be able to talk to the homeowner and continue with the land contract payments to him/her. You can explain to the homeowner that it would be to their advantage for several reasons: they get a monthly income, they get to collect the interest, the home would not be vacant, they would not have to go thru the process of trying to re-sell the home, etc.

It would be a win/win for the homeowner to work out a deal with you. It's not like dealing with a bank/mortgage company where they stand by "it's our policy" bull crap.

deanna wolkau · 04-03-2010, 03:28 PM

my folks are buying land from someone in oregon and they are needing to get out of the purchase what do they have to do to get out of it?

JGatti · 04-03-2010, 03:39 PM

My sister in law sold one of her homes on a land contract. It's my understanding that land contracts always are written in favor of the seller of the home or land. I'd talk to the owner first and try to work something out. In the case of my sister in law her contract stated if the buyer failed to purchase the home in a set period of time she gets the house back and the buyer..... well they are out all the money they just paid her for the time agreed on. If I were selling on a land contract for 3 years and the buyer backed out I'd take it back, raise the price and sell it again. Think about it, most likely you paid their mortgage on it for 3 years and walking away will have nothing to show for it. Why wouldn't they let you out of it?

scolls · 04-03-2010, 04:33 PM

Can you not refinance your home because it is worth less than what it is owed, or you have bad credit? If it is because it dropped in value, ask the land contract holder if he would accept a lower buyout. In this market I'm sure he will agree to a lower buyout.

fallingwater · 04-05-2010, 12:18 AM

Land contracts like a previous poster had stated are more for the seller. In fact when I was trying to sell a house I had a real estate agent suggest I do the land contract route because its such a sweet deal. Basically the buyer is the one to lose out because they paid into it and get nothing in return. Even if you had great credit, I am sure the amount you agreed on is no longer possible since real estate has taken a dump in most places.

I know two people that did land contracts and both got out. The first agreed to make a large balloon payment in 2 yrs. When the time came, he did not have the money. He had to move out. He basically paid rent for two years but over paid. The other person did a rent to own deal and put down 5 grand. The seller would not adjust the price and the home had gone down in value. So much so that no mortgage company would approve the loan because the house would not appraise. The seller refused to lower the price knowing full well he had the control.

All in all, I would have a real estate attorney look over your contract to find out what your rights are.

trapper1 · 04-09-2010, 08:37 AM

Quote:

Originally Posted by fallingwater

Land contracts like a previous poster had stated are more for the seller. In fact when I was trying to sell a house I had a real estate agent suggest I do the land contract route because its such a sweet deal. Basically the buyer is the one to lose out because they paid into it and get nothing in return. Even if you had great credit, I am sure the amount you agreed on is no longer possible since real estate has taken a dump in most places.

I know two people that did land contracts and both got out. The first agreed to make a large balloon payment in 2 yrs. When the time came, he did not have the money. He had to move out. He basically paid rent for two years but over paid. The other person did a rent to own deal and put down 5 grand. The seller would not adjust the price and the home had gone down in value. So much so that no mortgage company would approve the loan because the house would not appraise. The seller refused to lower the price knowing full well he had the control.

All in all, I would have a real estate attorney look over your contract to find out what your rights are.

I have sold on a land contract several times and when the buyer is unable to pay the property returns to me. However there is some court cost in clearing up the deed if the buyer skips out in the middle of the night. Unless you have something written in that contract that states otherwise, you shouldn't have any major problems (no I am not a lawyer) Get ahold of the person holding the land contract and tell them you are having problems and ask about just signing it back to them.

trapper1