Is it safe to buy a Contract Home?

Are we safe in securing a home through a contract sale? 

When purchasing a home on a land contract several issues should be addressed.

1. Purchase Price?
2. Taxes?
3. Assessments?
4. Is there an outstanding Mortgage?
5. Contract formalized or notarized?

Purchase Price:  Make sure you have a written agreement, not verbal.  Only a written agreement will stand up in a court dispute.  Any down payment money should also be noted in writing along with any specifics of the contract such as late fees, pre-payment penalties, interest rate,  Pick up a land contract form and make sure you cover all aspects of the agreement before signatures are obtained. 

Taxes:  Property taxes in the state of Indiana are in arrears.  Make sure you check with the Local County or city office to make sure there are no back taxes owing or chances of the property being offered on a tax sales.  The purchaser should make sure that the taxes are prorated (pay only from time of contract date). 

Assessments:  Depending on the property location, assessments may range from water or sewer charges to tap into the existing lines or for lines that may be scheduled.  Check the area for current assessments.

Outstanding Mortgage:  This is a situation you may want to steer clear of.  If a seller has an existing mortgage on the property the mortgage company may have restrictions that you are not aware of.  The interest rate on the seller's mortgage may go up and in turn cause a higher payment, longer term, and even cost more than the original negotiated sales price.

Contract Notarized:  Make sure your contract has been notarized; this will help in several ways.  Mortgage and homestead exemptions may apply in the state and help to reduce the property taxes in the years to come.  Another important issue is that once a contract is notarized it becomes a legal document that has been witness by a third party.  This may help if any disputes arise later.