This form of buying raises a number of concerns:

• Suppose you miss just one payment — do you lose your entire investment?
• Suppose the place burns down — who gets the insurance money?
• Is a land contract being used in an effort to avoid a due-on-sale clause with an existing loan? If yes, what happens if the lender calls the mortgage?
• What if the owner does not pay the mortgage or property taxes and the place is foreclosed? What happens to the equity interest held by the land contract purchaser?

Installment contracts are often used with timeshare sales. The logic is that if someone does not make a payment or pay maintenance it’s easy for the developer to re-sell the timeshare.

Buyers are best-served by holding title and getting a mortgage. If you need to buy with a land contract, at least have a real estate attorney review the paperwork before signing anything.

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Syndicated originally by Content That Works and posted with permission.

Should I Buy With A Land Contract? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: issues, land contract, questions

•  What is the sale history for the entire property during the past year?

What is the value per unit of the underlying mortgage?

•  What is the voting scheme — one vote per unit or voting based on unit size?

•  Is there a reserve fund for repairs? How much is now available?

•  Are major repairs anticipated in the next two years? If so, how will they be funded?

•  Is the co-op now facing or likely to face a lawsuit for any reason? If yes, what are the possible damages?

•  What pricing trends are associated with the co-op? Are prices rising? Falling? Can you review all sales for the past year?

•  Is a property tax rise known or expected?

Etc.

What Should I Ask When Buying A Co-op? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: co-op, concerns, issues, questions