LAND CONTRACT – GENERAL
A land contract is a written, signed
contract in which a seller agrees to
sell and a buyer agrees to buy land
and buildings on land, as described in
the contract. A price is paid over a
period of time on terms defined in the
contract. In order for the land contract
to be recordable, it must:
1. show the marital status of the
2. show the addresses of the seller
3. be signed in the presence of
4. be acknowledged by a notary
5. have the names of everyone
signing typed, stamped or legibly
printed beneath the signature.
6. show the name and address of
the person who prepared the
The buyer should record some notice
of his/her interest under the land
contract. Recording a land contract or
a memorandum of land contract
entitles a buyer
protection as recording a deed.
TERMS OF THE LAND CONTRACT
The land contract should also contain
1. Identify the parties.
2. Legal description of the land.
3. Purchase price.
4. Amount of down payment, if any.
remaining after down
6. Amount of installment payments.
7. Date payments are due.
8. Amount of interest (in Michigan
usually limited to 11%)
9. Date the interest and payments
10. The term of the land contract.
If the land contract is for a short term,
perhaps three to five years, this usually
results in a large “balloon payment” due
when the contract ends. If the buyer
can’t afford this large payment, it will
probably result in the loss of the
11. The method of payment of taxes
The seller can pay the taxes and
insurance premiums using escrow
payments made by the buyer. If the
parties want to establish an escrow
account, the agreement should specify:
• Whether the escrow will cover
taxes, special assessments, hazard
insurance or all three.
• The amount of each escrow
• The due date of each escrow
• The method for a