Land contracts offer people who have bad credit or who are recovering from financial hardship the opportunity to purchase their own property or home. A land contract is a written legal agreement between two parties for the sale of a property.
Property taxes can be paid at the end of the year, put into an escrow account or paid monthly.
The seller may decide how he wants the taxes paid. Typically, the buyer will pay the taxes as part of the monthly payment schedule. The payments may be placed into an escrow account so that the money is available when the taxes are due. Likewise, tax payments may be estimated based on previous years’ taxes.
Some buyers do not realize they are assuming ownership of the property and all that it entails. Fees, taxes and insurance may or may not be part of the purchase price of the property. It's important for home buyers to know exactly what fees or taxes are included in the monthly payments, if any.
Meeting the payment requirements for land contract taxes ensures that at the end of the agreement, the buyer can assume ownership of the title. Taxes left unpaid could hold up the property transfer.
Taxes may go up over the period of the land contract agreement. If the buyer is paying the land contract taxes, it is his responsibility to notify the seller of any changes so that the monthly payments may be adjusted to reflect the change in the taxes.
- Image by Flickr.com, courtesy of Casey Serin