| 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
BERKSHIRE HATHAWAY HOME SERVICES KEE REALTY