So what is a land contract in Ohio?

In Ohio, a land contract is a legal agreement in which a land owner sells a parcel of land with a house on it and agrees to finance the purchase for the buyer.This form of seller financing was popular in the 1970s and 1980s when it was difficult to obtain a conventional mortgage loan through a lending institution. Land contracts became less common over time, as lending rules relaxed and it became easier to access credit. However, in recent years, land contracts have started to re-emerge in the housing market.

A land contract cannot be made for land alone; a land contract also must include a loan to the buyer.To satisfy the contract, the buyer makes monthly payments, which include interest, to the seller until the loan is paid in full. Only upon satisfaction of the contract does the seller transfer the property’s deed to the buyer. While land contracts have elements similar to “lease to own” and “rent to buy” agreements, those agreements are not land contracts. Land contracts are complicated transactions; you should never enter into one without first consulting legal counsel.

The Steps to Entering Into A Land Contract

First, make sure that the individual attempting to sell the property owns it. Ask to see the property’s deed and check the county recorder’s office to confirm the property has a clear title. Next, have a professional inspect the property. In a land contact, the buyer typically will be responsible for all necessary repairs to the property.

Determine who will be responsible for the property’s taxes and homeowner’s insurance—the buyer or the seller. Also, determine if there are any unpaid taxes on the property by consulting the county auditor’s office.

Find out if there is a down payment associated with the land contract. Unless both parties agree otherwise, the buyer generally does not get the down payment back if he or she fails to pay off the land contract.

All land contracts must be in writing. Have legal counsel review all paperwork associated with the land contract before signing. Ask the seller where the land contract will be recorded. If the seller tells you that it will not be recorded, walk away. All land contracts should be recorded for the buyer’s safety.You should take plenty of time to be sure you are comfortable with all of the land contract’s terms. Like anything, if it seems too good to be true, it likely is.