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Land Contracts

I am Buying a House on Land Contract and
I am in Financial Distress

A buyer is in financial distress when he has lost income, struggles to make payments or has missed payments.  Financial distress is caused by a tight cash situation where the buyer cannot pay or has difficulty paying the amount owed on the due date. 

Generally homeowners experiencing financial hardship look to state and federal programs that can help them save their home like Save The Dream Ohio and HAMP.  But buyers purchasing their houses on land contract do not qualify for help through foreclosure prevention programs because they are not homeowners.  In a land contract situation, the seller remains the owner of the house until the buyer pays the full purchase price and the seller then transfers the deed to the buyer. 

In a non-land contract house purchase, the buyer borrows the full purchase price from a lender (bank or savings and loan) and pays it to the seller who then transfers the deed to the buyer. The buyer (now homeowner) then makes monthly mortgage payments to the lender.

The Buyer of a House on Land Contract
has Limited Options

Because there are no government programs that help land contract buyers pay their house installment payments, buyers are left with the options below.  When dealing with legal issues it is always recommended that buyers consult an attorney for legal advice.  If you cannot afford an attorney call 1-866-Law-Ohio or visit OhioLegalServices.org for your closest legal aid office.

 
  • Negotiate With The Seller To Keep The House 

    A land contract is between the buyer and the seller and it can only be modified if both parties to the contract agree.  The seller may or may not be willing to renegotiate the contract or temporarily allow partial payments, but the only way to know is to have an honest conversation with the seller.  As soon as the buyer fails to make a monthly payment, the seller will know the buyer is having financial problems.  Legally, when the buyer misses a payment, he has breached his agreement under the contract and the seller can take certain actions allowed by statute.  So the time for the buyer to begin his conversation with the seller is prior to missing a payment.  If an agreement is reached that changes the land contract, be sure to put the changes in writing and have the document signed by both buyer and seller.  An oral agreement may not hold up in court.

  • Negotiate With The Seller To Walk Away From The House
     

    If you decide that you are not able to continue to buy the house, you can still negotiate a cancellation of the land contract.  An agreement with the seller to cancel the land contract will save the seller the cost of hiring an attorney and the court costs to file a court action to cancel the contract.  It also speeds up the time in which the seller can rent the house because the seller does not have to wait for the court action to be finalized.  These benefits the seller gains in a settlement give the buyer some leverage when negotiating a cancellation of the land contract.  However, the buyer must also know what he, the buyer, is giving up in such a settlement.  That is why it is very important for the buyer to know his rights under a land contract.

  • Know Your Rights As Buyer Under A Land Contract

    Whether the financially distressed buyer decides to walk away from the land contract or go to great lengths in order to make the land contract payment, such as selling items, borrowing from friends and relatives or not paying other bills, may depend on how long the buyer has been making payments and how much of the purchase price has been paid.  See When The Buyer Misses A Land Contact Payment for information regarding the land contract buyer's rights in different circumstances.

Other Ways To Help With Financial Distress

 
  • Check To See If You Are Eligible For Government Benefit Programs

    Government benefit programs may pay for items and services for which you are currently paying.  For example, if you are eligible for Medicaid, the money you are currently spending for health care can be used to help pay your monthly land contract payment.  See the Benefits page of this website for more information.

  • Get Help With Financial Debt and Budgeting

    It is critical to establish a financial plan and find solutions to credit and debt concerns which may include ways to increase income or decrease expenses.  Poor credit is fixable over time, but to fix it you must first know what is wrong with it and what you can do to improve it.  A visit to a non-profit credit counseling agency will help you understand the problem and how to go about fixing it.

Land Contract Self-Help

Land Contract Definition

In Ohio, a land contract, also called a land installment contract,  is an agreement by a seller to sell the buyer land and a house on that land for an agreed price.  The buyer agrees to make monthly installment payments directly to the seller, plus interest, until paid in full.  The seller agrees to transfer the deed (ownership) to the buyer after all payments have been made.

Land Contract - An Alternative Pathway to Home Ownership Video

In this eight minute video, Ohio Poverty Law Center Attorneys Linda Cook and Joe Maskovyak discuss the pros and cons of land installment contracts and rent to own or lease purchase agreements as alternative pathways to home ownership. 


Land Contract Self-Help Form

To help low-income Ohioans unable to retain legal counsel, the Ohio Poverty Law Center has created a form that land contract homeowners can complete and file in their eviction or foreclosure case.  The link listed below to the form is completed through a self-guided interview process that enables immediate, easy, 24/7 access at no cost to low-income Ohioans who have no legal representation in their lawsuit. 

The form is created by an online application that prompts Ohioans to answer questions with the information needed to create this legal document.  Using this online template, an individual is guided through an “interview session” and responds to a series of questions regarding her own situation.  After completing this information, a personalized land contract answer is produced that can be saved and printed.  The final form also includes instructions for signing and filing the document with the court.


 

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This website provides general legal information and not legal advice.  The law is complex and changes frequently. 
Before you apply any general legal information to a particular situation, consult an attorney. 
If you cannot afford an attorney call 1-866-Law-Ohio (1-866-529-6446) or visit OhioLegalServices.org for your closest legal aid office.

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