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Common Differences Between Land Contracts & Rent-to-Own (Lease)

Description	Land Contract	Rent-to-Own (Lease)
Deposit	Usually 10-20% of price- Minimum	Usually less than 3% of sales price
Taxes	Paid by Buyer-Common	Paid by owner
Price	Fixed price agreed to	Fixed price set – Must Appraise or negotiate
Term	Normally 3-5 years minimum – up to 20 years	Normally 1-3 years
Title	Buyer given Equitable Title Normally recorded with state	Owner holds Title – no change
Payment	Based on interest rate& taxes	80-100% of Square Feet- Common
Interest	Max 11% – Normal 7-8% – Common	None
Balloon	Balance owed after payment, taxes and interest	Mortgage based on appraisal at end of contract term
Rebate	None	25% of 1st year’s lease pay’s -Common
Credit	Must have ability to pay off balloon- Good job, inheritance, etc…and a large down payment will help offset a low credit score.	Normally above 500/550 credit score.
Existing Mortgage	Mortgage contract must allow! Due on sale clause will prevent this.	No transfer until closing. Mortgage
Default-Buyer	Loses all deposits / Payments	Loses all deposits & rebate, can be evicted
Recorded in County	Yes
Default-Seller	Usually no mortgage	Can request proof of payments if large

Common means it is seen often, but not always!
Above differences are from my experience and certainly not the same for all Land Contract sales.

Larry Williams
248.917.2323

asklarrywilliams(at)gmail(dotted)com
www.LarryWilliamsRealtor.com