Problems With Your Land Contract

What if something goes wrong?

Contact Legal Services of South Central Michigan for help. Land contracts, for any number of reasons, sometimes do not work out for the parties. Each party has a set of remedies. For example, either party can sue for breach of contract. Some remedies, however, are specific to buyers or sellers.

 

Remedies for a buyer:

Generally, upon a buyer’s fulfillment of the land contract, the seller should give the buyer the required deed conveying the property free of liens created by the seller. A seller who fails to provide the required deed may be in breach of the contract. If the seller is unwilling or unable to give the required deed, the buyer may have various options, including legal action for: 
1.  Specific performance of the land contract, including a court order directing the seller to give the required deed.
2.  Quiet title.
3.  Cancelation of the land contract, seeking the return of the money paid by the buyer in exchange for all of the buyer’s rights in the property.
4.  Money damages.

 

Remedies for a seller:

Like a buyer, a seller can sue for breach of contract if the buyer breaks it. The seller may also foreclose on the buyer or have the buyer forfeit the property. The differences between foreclosure and forfeiture are as follows:

 

Forfeiture
  • Moves through the court process quickly.
  • Buyer can keep the property by making any past-due payments within 90 days of a court judgment.
  • If buyer loses the property, s/he is not responsible for the remaining balance.
  • Seller can only do this if the land contract specifically allows for forfeiture
Foreclosure
  • Moves through the court process slowly.
  • Buyer may only keep the property by paying the entire balance owed (all past and future payments).
  • If buyer loses the property, s/he may be responsible for the difference between what the property sells for at a sheriff's sale and what s/he owes on the property.
  • Seller can do this regardless of whether the land contract specifically discusses foreclosure.

 

Click here to download the handbook, A Buyer’s Guide: Understanding land contracts.