Posted by JohnBoy on October 29, 2000 at 10:28:28:
I know under a L/O the occupant would need a renter policy and not get the tax deductions. Under a land contract however, the buyer does get homeowners insurance and does get all the tax and interest deductions.
Buying on land contract/ What about title ins? - Posted by hatmat4
Posted by hatmat4 on October 26, 2000 at 07:07:59:
Hi all,
Just a quick newbie question. I am getting ready to purchase a house on land contract. I was wondering what do I do about the title or title insurance? and When ? At closing or when I go to refinance the l/c ( in 18 months).
Re: Buying on land contract/ What about title ins? - Posted by john(MI)
Posted by john(MI) on October 27, 2000 at 15:04:23:
Nothing guarantees the future. But closing on a land contract without title insurance…you deserve what you get. The problems just described are obviously real probelems. With the possible exception of a super tax lien they can be solved by recording the land contract (or memorandum of land contract) at the time of closing as well as by contract language that deals with the existence of underlying mortgages and the seller’s abilty to mortgage the seller’s ineterst in the propety after closing.
Title insurance now doesn’t guarentee the future - Posted by David Krulac
Posted by David Krulac on October 27, 2000 at 14:50:20:
what if the seller incurrs further debt like a new mortgage on the property, or what about an IRS lein for $1.2 million, or what about an auto accident liability claim for $5 million? What then? your title insurance now would offer NO protection.
Re: Buying on land contract/ What about title ins? - Posted by John (MI)
Posted by John (MI) on October 27, 2000 at 08:27:15:
Get title insurance! Most title insurance companies will issue a “vendee’s” policy that will insure as the purchaser under the land contract. Before you close and commit yourself you have to know that the seller is in a position to convey marketable title to you when the land contract is paid off. Treat it as if you were paying cash in full at closing.
Re: Buying on land contract/ What about title ins? - Posted by Bud Branstetter
Posted by Bud Branstetter on October 26, 2000 at 17:57:01:
Are you aware that the land contract does not guarantee that the owner can deliver clear title now or in the future? Are you aware what would happen if there were a catastrophic loss and the insurance company only paid him off and he did not rebuild. There are ways to protect yourself but the LC is not one of them.
Re: Buying on land contract/ What about title ins? - Posted by Keith (AL)
Posted by Keith (AL) on October 26, 2000 at 16:10:13:
I’m a little confused.
On land contracts I don’t believe that title is transfered (at least not in AL). So there is no title insurance to obtain. You should, however, have a title search performed before signing the l/c. By performing the title search you have a good idea if the Sellers can convey a clear title when you pay off the l/c. When you pay off the l/c (there’s no refinance because you haven’t financed with a mortgage company to begin with) and actually receive the title, then you should obtain title insurance.
Am I totally missing the point?
Title insurance now doesn’t guarentee the future - Posted by JohnBoy
Posted by JohnBoy on October 28, 2000 at 19:20:53:
What lender would grant a mortgage in excess of the amount owed on a land contract that is recorded against a property? Wouldn’t any other liens become junior liens behind a recorded land contract, with the exception of unpaid property taxes?
Buying on land contract/ What about title ins? - Posted by JohnBoy
Posted by JohnBoy on October 28, 2000 at 19:25:41:
Couldn’t you record a performance mortgage with the land contract? How would a land contract differ from a lease option guaranteeing clear title now or in the future?
Re: Buying on land contract/ What about title ins? - Posted by Bud Branstetter
Posted by Bud Branstetter on October 29, 2000 at 07:10:02:
You could record a performance mortgage. You may even be able to get a mortgagee title policy. You could add the owner of the performance mortgage as an additional insured. You could have even had the owner sign over the title to a land trust and had the contract for that interest in the trust. But you are still in an inferior position on title. The laws generally are less stringent for cancelling a land contract. The occupant probably has to get renters insurance versus homeowners. And taxwise he doesn’t get the deduction for taxes and interest. Do a Pactrust you get all the benefits but still are not the owner. The post was that of a newbie and not likely to know how to do any of these things much less even heard of the concepts.