State of Michigan Land Contract Laws

State of Michigan Land Contract Laws: What You Need to Know

If you`re considering purchasing or selling property in Michigan, you may have heard of a land contract. A land contract, also known as a contract for deed or installment land contract, is a financing agreement between a buyer and a seller, where the buyer agrees to pay the purchase price over time, often without a traditional mortgage lender involved.

However, land contracts are subject to Michigan`s laws and regulations, which can be complex and nuanced. In this article, we`ll provide an overview of the state of Michigan land contract laws that you need to be aware of before entering into a land contract agreement.

Legal Requirements for Land Contracts in Michigan

First and foremost, a land contract in Michigan must be in writing and signed by both parties. The contract must include the purchase price, the amount of the down payment, the terms and length of the payment plan, and the interest rate, if applicable.

Additionally, Michigan law requires that the seller provide the buyer with a disclosure statement, outlining the terms of the contract, including the amount of the payments, interest rate, late payment fees, and any other charges or fees that may apply. This disclosure statement must be provided to the buyer at least three days before the contract is signed.

Once the land contract is signed, it must be recorded with the county register of deeds within 15 days. This step is important, as it secures the buyer`s interest in the property and ensures that the seller cannot sell the property to another party.

Forfeiture and Redemption

In Michigan, if the buyer fails to make payments as agreed under the land contract, the seller has the right to forfeit, or terminate, the contract. However, the seller must follow strict legal procedures to do so.

If the buyer has paid less than one-third of the purchase price, the seller can forfeit the contract without judicial intervention. However, if the buyer has paid more than one-third of the purchase price, the seller must file a complaint in court and obtain a judgment of possession before taking possession of the property.

It`s important to note that even after forfeiture, the buyer has the right to redeem the property by paying all past-due amounts, as well as any costs and fees associated with the forfeiture.

Consumer Protections

Michigan law provides several protections for buyers entering into land contracts. For example, the seller must provide a detailed payment history to the buyer upon request, and cannot charge prepayment penalties. Additionally, the seller cannot impose excessive late fees or engage in certain deceptive practices, such as misrepresenting the property`s value or condition.

Buyers should also be aware that some land contracts may be subject to federal and state regulations, such as the Truth in Lending Act and the Michigan Consumer Protection Act. These laws provide additional protections against unfair, deceptive, or abusive practices.

In conclusion, if you`re considering a land contract in Michigan, it`s important to familiarize yourself with the legal requirements and protections in place. Working with a knowledgeable real estate attorney can help ensure that your rights and interests are protected throughout the process.