Help Me Understand Land Contract Advantages? - Posted by Stacy (AZ)
Posted by Stacy (AZ) on March 10, 1999 at 12:06:46:
OK, I’ve bothered my title guy enough, and I think I confused him in the process (heh, heh). And I can’t find the full answer within the AZ revised statutes. I’m trying to determine why I should use a Land Contract under certain circumstances rather than a note and Trust Deed. This question is for selling property with seller financing.
My research has turned-up the following:
In AZ, the equivilent of a Land Contract is called a Sales Agreement, or Agreement of Sale. Not used very often here, but it’s available if I need to use it.
The main legal differences between Trust Deeds and Sales Agreements in AZ are:
a. Property sold with a Trust Deed conveys legal title to a third party trustee until the contract is complete, whereas with a Sales Agreement, legal title stays with the seller until the contract is complete. Both convey equitable title to the buyer at the time of the sale.
b. The foreclosure period for Trust Deeds is 90 days, but the foreclosure period for Sales Agreements depends on the amount of equity held by the seller. If the seller received up to 10% down, the foreclosure period is 20 days, and the number of days increases as the seller’s equity decreases.
My title guy said that the seller retaining legal title instead of the third party trustee doesn’t really matter, in reality…even though it sounds great in theory.
Now I’m confused. Is the only real advantage of using a Sales Contract that you can foreclose sooner? For those who use Land Contracts, does the AZ Sales Agreement sound the same?
Thanks in advance for any insights-