Whether it is building it from scratch, or purchasing a new house on a spot that is ideal for a person, it is probably the dream of most individuals to build a new home. Though having this dream is quite simple enough, attaining the dream is a different story. There are several obstacles a person has to go through before getting that dream house.
Though not an easy task, it is not impossible either. There are several ways in order to purchase your own home. Many rely on the approval of bank loans when it comes to the financial means of buying their preferred home. But bank loans rely on existing credit that a person or couple has. What if you do not have bank credit? Then another option is going for land purchase agreements.
Land Purchase Agreement
Land Purchase Agreement
Land Purchase Agreements is an arrangement between a seller of a property and a buyer to conduct payments gradually to the seller instead of the bank. Often when a buyer does not have credit ratings but wants to buy a home, a land purchase agreement is used instead of bank loans. This form of arrangement requires trust between both parties in order for it to work effectively. The land purchase agreement form is the legally binding document that records the agreement between the seller and buyer.
Land Sales Agreement Template
Crucial Elements of a Land Agreement Agreement Form
A contract is only legally binding if it contains all the elements that is required. If the terms and conditions set forth in the contract are not performed by a party, they could be legally required to pay damages to the other parties and could be in default. This is otherwise known as suing for “specific performance”.
Legal Purpose: A contract can be deemed invalid should it involve fraud upon another, therefore parties cannot push through with a contract to pursue an illegal act. Instances like this is if the seller is not the legal owner of the property, the contract will not be valid.
Competent Parties: During the time of entering the contract, the involved parties must be of legal age as well as have the mental competency. Do some due diligence if you are going to be involved with another party that has questionable competencies.
Agreement by Offer and Acceptance: This is depicted through an offer to invest a property by a buyer and the acceptance of that offer by the seller. The correct manner of doing so is through a written agreement that includes the signatures of the involved parties.
Consideration: This relates to anything of legal value that is being offered and exchanged in the contract. This can either be services, money, or other beneficial goods and must be explicitly mentioned in the contract.
Consent: This is the portion of the contract that states that it must the parties are required to have willing and knowing consent regarding the terms and conditions of the contract. Misinterpretation, fraud, mistakes, or undue duress on any party to the contract must be avoided at all costs.
Agreement To Purchase Real Estate
Steps in Closing a Land Purchase Agreement
Step 1: Make a Purchase Agreement:
Create the legal document that is signed by the possible buyer bidding for an offer on the real estate that is to be sold. It should state that the offer is for a land purchase agreement, and must indicate the purchase price, initial down payment, length of payment term, and other conditions of sale.
To make it an official purchase agreement, a seller must sign the offer, granted that they have accepted the terms of the buyer’s purchase agreement, to make it an official purchase agreement.
Step 2: Sign a Land Contract:
Is a different legal contract, it contains all the terms and conditions that the buyer and seller have agreed upon. It lists down the address of the real estate as well as its full legal description, the purchase price, initial down payment, term payments, number of payments to be made, and other payments that are required. The land contract must also require the terms of the payment such as how it is paid for, the due dates, any grace periods for late payments, late fees, etc.
Step 3: File a Memorandum of Land Contract:
The memorandum of land contract is a shortened or summarized legal document that references the land contract. It is meant to publicly disclose the buyer’s interest in the property without the disclosing the full details of its terms and conditions, record the full land contract, as well as its price. This is filed with the city and county to document the interest of the buyer in the property. The address and legal description of the property must be listed in the memorandum, as well as the names of the parties involved, and the date of the land contract. This memorandum is must be notarized and the seller must affix their signature on it.
Step 4: Prepare Necessary Forms of Property Transferal under a Land Contract:
Although the buyer cannot have an authentic legal title to the property until the full payment of the purchase has been made, the buyer will want to file additional forms to earn the benefits of being the owner of the property.
Step 5: Draft the Deed:
Signed by the seller at the closing, a deed to transfer the legal title of the property from the seller to the buyer should be drafted. This deed will be held in collateral just before the final payment is transacted on the land contract and then filed with the proper government agency. Held in collateral means that the deed is held until payment of the land contract. The deed in collateral for the buyer and seller may be held by a title agency, a financial institution, or a lawyer.
Agreement for Sale of Agriculture Land
Step 6: Formulate the Closing Statement:
An accounting of the debts and credits to both the buyer and seller as part of the land contract transaction is what should be needed in a closing statement. A title agency or an attorney can prepare a closing statement for the parties, which also includes an installment of fee schedule displaying the projected payments to be made from buyer to the seller in fulfillment of the financial obligation of the land contract.
Step 7: Prepare Title Insurance
A policy of the title insurance delivered on the property conditional to the land contract may be something a buyer is interested in and would like to pay to have. A title agency to operate a land record search can be hired by the buyer. The costs in the land contract agreement can be agreed to be split between the parties. It is imperative to have copies of all the records and documents that are involved in closing on a land contract to guard the interest of each party involved in the sale.
Step 8: Get Professional Assistance with Land Contracts
Always consult with a professional, such as a real estate attorney, if you are purchasing property with a land contract as the rules vary by each country or state. Also, make sure that involved real estate brokers are knowledgeable regarding land contracts.
Contract of Purchase Sale Template
In real estate, whether you are a buyer or seller, it is highly important to be knowledgeable regarding your own rules and responsibilities, from researching on real estate laws to digging deep into finding out on whether the business you are involving yourself in includes shady business. Protecting yourself from being fooled and risking the possibility of losing cash in the process are one of the main objectives in land purchase agreement forms. You may see other real estate forms to gain more knowledge regarding purchasing or selling of properties.
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