In Michigan, as in other states, a land contract is a legal agreement between a buyer and seller that outlines the terms a real estate sale. A land contract operates in much the same way as a mortgage except that instead of a bank or lending institution providing the financing for the purchase of the real estate, the seller agrees to finance the sale by accepting payments directly from the buyer.
Land Contract Vs. Conventional Mortgage
As a seller-financed real-estate transaction, a land contract may make some properties easier to sell than waiting for a buyer who must qualify for a conventional mortgage loan. The details of the sale are at the agreement of the seller and the purchaser, including the creditworthiness of the buyer, down payment amount, interest rate (typically up to 11 percent) and term of the loan. Typically, Michigan land contracts convey equitable title to the purchase while the seller retains legal title until the terms of the contract are satisfied.
Registering a Land Contract
Conventional mortgages must be registered, or recorded, in order to notify the public that the lender has a lien against the property. A land contract is not legally required to be recorded in Michigan. However, both the buyer and the seller may wish to record the contract to protect their interests in the property.
Make sure the contract has been properly executed before recording it. The land contract should be signed in front of a notary public or local judge. Make a copy of the land contract for your records and send or deliver the original to the appropriate register of deeds office.
Choosing the Filing Location
Select the appropriate Michigan register of deeds office where the land contract must be filed. The contract must be filed in the Michigan county in which the land is located.
Contact the appropriate office to ascertain how much the current recording fee is for your document. Recording fees vary by county and by length of document and are subject to change. Links to all Michigan county government websites can be accessed through the Michigan Start Pages website.
Mailing or Delivering Your Contract
Mail your land contract, along with the appropriate filing fee to the appropriate Michigan register of deeds office. You may also deliver the land contract in person for recording. In most cases, the actual recording of the land contract will take two days or more. The original land contract will be returned to you in the mail or will be available for pick up once it has been recorded.
