If you want to purchase a home, but do not qualify for traditional mortgage financing, buying a home on land contract may be an appropriate choice. A land contract involves making periodic payments to the seller, who retains the title until you have paid off the loan. You may wonder if the seller is responsible for repairs to the property -- in most cases, the seller does not have to pay for repairs or maintenance.
Buyer Responsibility for Repairs
When you negotiate a purchase for a home on land contract, review the contract before signing it. If contract language making the seller responsible for repairs to the property does not exist, the seller may typically make you responsible for repairs. Because the seller owns the title to the property until you complete the purchase, he typically has wide latitude to evict you from the property. The seller may threaten eviction if you do not maintain the property before paying it off.
In some cases, you may seek reimbursement for repairs you have made to the home while under land contract if the seller forecloses. Keep all receipts for materials purchased and labor hired to perform the repairs. Obtaining reimbursement for repairs usually involves filing a lawsuit against the seller -- you may incur court costs and legal fees while attempting to obtain payment.
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As a land contract buyer, you should hire a home inspector to evaluate the property for defects before signing a contract. Even if the contract language places responsibility for repairs on the seller, defects in the home can decrease your enjoyment of the property after you move in. Significant defects, such as a leaking roof or outdated electrical wiring, may also make it difficult to obtain insurance on the property.
Because the seller is typically not responsible for repairs on a land contract party after you make an agreement, you should determine whether you will be able to pay for the cost of the repairs in addition to the land contract payments. Buying a home and having to pay for repairs can make it difficult to manage your finances, which may cause you to default on your land contract payments.