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Unformatted text preview: es contract, contract for deed, or contract to sell. The essential characteristic is that the seller retains title to property to the end of the contract term. Buyer receives possession at inception, but not a deed. A land contract is not a true mortgage. It is mentioned in this section only because it is used in some types of transactions. As its name implies, it is a contract, and if the purchaser meets all of the provisions of the contract, he or she may sometime in the future get a deed to the property. An agreement of sale has been used in the past to sell recreational land where the developer, due to previous financing, cannot give clear title to the property until the previous financing is paid and released. It is also used to sell low–quality rental property to the present tenant. There are some severe drawbacks to this type of financing, including the following: The installment sales contract, if not recorded, would allow a less–than– honest developer to sell a piece of property more than once. A title policy may not be secured on the property. Most severely, even though the purchaser makes all of the payments in good faith, he or she may not be able to receive clear title due to insanity of the seller or a death, divorce, or bankruptcy concerning the seller or a member of his or her family.
Dynasty School (www.dynastySchool.com) 9-43 REAL ESTATE FINANCE Recognizing all of the possible dangers to a purchase of recreational or resort–type lots, the federal government through HUD, established the Office of Interstate Land Sales Registration with the passage of the Interstate Land Sales Full Disclosure Act in 1969. The purpose of the act was to police the sale of land by developers in subdivisions of 50 lots or more for lots less than 5 acres. Under the act each developer must prepare and submit an Office of Interstate Land Sales Property Report Form. The developer must supply this report to the prospective purchaser before he or she signs any contract. If the purchaser does not receive a...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10