A land contract purchase can cause confusion. When do you own the property? When does a land contract confer ownership?  

Q: I have a land contract to purchase my home in Flint, Michigan. I started to pay the seller, then after a few months my checks mailed to the seller were not being cashed so I stop sending the checks. What are my options and future outlook on this house?

A: For you to become owner of the home under a land contract, you must comply with the terms of the land contract. The land contract requires you to make a certain amount of payments to the seller and in exchange, the seller gives you the deed to the home when you’ve made all the payments.

At this point, you have made some of the payments but not all of the required payments to become the owner of the home. It’s possible that the seller died and your checks ended up in a black hole. But you’ll need to find out where the seller is or who the seller’s heirs are to make your payments and end up having the heirs abide by the terms of your land contract. When you find the heirs and they prove to you that they have the right to convey title to you, you can make the payments to them.

If you had an attorney help you out with the purchase under the land contract (and we hope you did), you might want to talk to the attorney again before you make more payments. You’ll want to know that the person receiving the payments (your seller or his heirs, if he has died) will have the right to convey title to you.

There could be some bumps in this road. If the seller died and had many heirs, all of those heirs would have to work together to convey title to you. If you pay one of the heirs, that heir could end up keeping the money but not have the right to convey title to you.

Your case is a good example of the risks that buyers face when they buy a home on an installment basis, especially if they don’t work with an attorney who understands how to put together one of these deals.

In some states, the title to the property is put into a trust of some sort that would give the buyer the right to continue to make payments and when those payments are made, the trustee or successor trustee have the ability to automatically convey the title to the buyer. All of these terms are expressly set out in the documents and the parties can even draft a deed when the contract is signed allowing the trust or a third party to deliver the deed once the buyer proves that he or she has made all the payments under the land contract.

If you can’t find the seller and can’t find the heirs, you have what is called, in legal terminology, an “equitable” interest in the home but you don’t have legal title to the home. And you’ll need legal title at some point to end up as the full owner of the home. Again, talk to an attorney to figure out how much you’ve paid so far, then determine what is going on with the seller and see what your options are going forward.

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