110631 Resource 78777 78860 78860 1134445162714 1134489649600 Controlled Land Contracts on Commercial Property

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<p>What is a land contract?&nbsp; Is it a purchase or refinance?</p><p>In the Midwest, <strong><em>land contracts</em></strong> or <strong><em>contracts of sale</em></strong> are very common in the sale of small commercial properties, as well as in the sale of&nbsp;homes and land.&nbsp; A land contract is first created when a seller finances the sale of his property.</p><p /><p>For example, a retiring insurance salesman might sell his small office building to a young salesman taking over his practice.&nbsp; The sales price of the office building might be $150,000.&nbsp; The young buyer might only be able to put down $10,000 - which is far too little to qualify for a bank loan.&nbsp; The old guy might have faith in the young man, however, so he might carry back a $140,000 contract of sale on the building.&nbsp; The young man will make payments for five years and then refinance the balloon payment due at that time.</p><p>So how is a land contract or a contract of sale (the terms are identical) different than a regular mortgage?&nbsp; Until the young man in our example pays off the contract of sale, title to the property is still vested in the name of the old guy.&nbsp; During the term of the land contract, the old guy is known as the <strong><em>legal owner</em></strong> and the young man is known as the <em><strong>equitable owner</strong></em>.</p><p>The equitable owner of a property enjoys&nbsp;virtually all of the rights of ownership - the right to use the property, the right to exclude others (Get&nbsp;the &amp;^%@ off my property!), the right to collect&nbsp;rents, and&nbsp;the right of&nbsp;quiet enjoyment of the property.&nbsp; These rights are what is known as the <strong><em>bundle of rights</em></strong>.&nbsp; Think of them as arrows in a quiver.&nbsp; The only right the equitable owner does not yet enjoy is the right to have his name listed as the legal owner.</p><p>What effectively is the difference between a land contract and a normal mortgage carried back by a seller?&nbsp; Not much.&nbsp; Many years ago the legal owner&nbsp;of a property sold under a contract of sale could foreclose out the equitable owner faster than by foreclosing a mortgage.&nbsp; He could foreclose out the buyer in, say, three months versus the seven months it often takes in court to foreclose a mortgage.&nbsp;&nbsp;Over the years state legislatures and&nbsp;courts, however, have extended the cure period for equitable owners to almost rival that for&nbsp;mortgagors.&nbsp; The difference between a land congtract today and a mortgage is mainly one of form.</p><p>Land contracts can often be assumed, especially if the interest rate is higher than what the original seller can earn on his money if he gets paid off.&nbsp; Let's suppose the interest rate on a&nbsp;land contract is 10%, and the banks are only paying 3.5% on deposits.&nbsp; You can bet that the former seller will often gladly allow his land contract&nbsp;to be assumed.&nbsp; Junior financing behind land contracts is also possible.&nbsp; As a practical matter, there is little difference between a land contract and a mortgage.</p><p>You can find hundreds of commercial lenders for tiny commercial properties on C-Loans.com.</p><p /><p /> 9 application/xml false commercial financing. commercial loans commercial real estate loans contract of sale Land contract Find Hundreds of Commercial Lenders, Even for Tiny Deals http://www.c-loans.com/onlineapp Mozilla/4.0 (compatible; MSIE 6.0; Windows NT 5.1; SV1; .NET CLR 1.1.4322) 71.50.240.27 71.50.240.27 GBlackburne false true false false true 198508 false false true false false false true 78777 blog blogsite/CLoans/web