What Is a Land Contract in Ohio
If you are looking to purchase a property in Ohio, you may have come across the term “land contract.” A land contract is a form of seller financing where the buyer pays the seller directly instead of obtaining a traditional mortgage from a bank or other lending institution. In this article, we will explore what a land contract in Ohio is and how it works.
What is a Land Contract?
A land contract is a type of real estate purchase agreement where the seller provides financing to the buyer. The buyer makes regular payments to the seller over a specified term, which may be several years or longer. Once the buyer has paid off the full purchase price, the seller will transfer ownership of the property to the buyer.
In a land contract, the seller retains the legal title to the property until the buyer has made all of the required payments. However, the buyer generally has immediate possession and use of the property.
How Does a Land Contract Work in Ohio?
In Ohio, land contracts are also known as “installment land contracts.” They are governed by Chapter 5313 of the Ohio Revised Code. The main provisions of a land contract in Ohio include:
– Purchase Price: The purchase price of the property is agreed upon by the buyer and the seller. The purchase price will generally include interest, which is typically higher than a traditional mortgage rate.
– Down Payment: The buyer may be required to pay a down payment to the seller upfront. This amount is negotiated between the buyer and seller.
– Payment Terms: The payment terms of a land contract will typically include the payment amount, frequency, and duration of payments. Payments are typically made monthly and may be due on the first of the month. The duration of a land contract may be several years or longer.
– Interest Rate: The interest rate on a land contract is determined by the buyer and seller. It is typically higher than the prevailing mortgage rate.
– Title: The seller retains the legal title to the property until the buyer has fully paid for the property.
– Default: If the buyer fails to make payments under the land contract, the seller may have the right to terminate the contract and keep any payments made by the buyer. The seller may also have the right to initiate a foreclosure proceeding to take back possession of the property.
Conclusion
A land contract in Ohio is a form of seller financing that can be a useful option for buyers who are unable to obtain traditional financing. However, it is important to carefully consider the terms of the land contract before entering into an agreement. Buyers should work with a real estate attorney to review the contract and ensure that it is fair and equitable.
