Land Sale Contracts - Explained
Sales and financing by Owner
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What is a land sale contract?
A land-sale contract is a situation where the owner of land sells it subject to the condition that the seller retains title to the land until the buyer pays the full purchase price. Basically, it is a seller-financing scenario, where the seller retains ownership of the land until it is fully paid off. The rights of the buyer during this period are determined by agreement between the buyer and seller. Generally, the buyer acts as if she is the owner during the payment period. She has the legal right to possess and use the land and is responsible for paying taxes and insurance. If the purchaser fails to make any scheduled payment, she defaults under the agreement and forfeits her right to purchase the property.
Note: Most states have laws protecting the purchaser in land-sale contracts. Basically, the purchaser does not forfeit her entire interest in the land in the event of a missed payment. Rather, the law recognizes an equitable interest in the land that accrues as the purchaser makes payments.
Next Article: What is a Security Interest in Personal Property? Back to: SECURED TRANSACTIONS
How do you feel about these types of arrangements? Can you think of situations where this arrangement could be inequitable to the purchaser? Should the law provide additional protections for the purchaser? If so, what?
Geoffrey is considering selling his farm. Much of the farm consists of land that is suitable for hay or grazing livestock. After listing the property for several months, the only bid on the farm is from a buyer requesting the seller to finance the purchase. Geoffrey is uncomfortable with surrendering ownership of his farm until the purchase price is paid. What option might Geoffrey employ to alleviate his concerns?
- Secured Transactions Law (Intro)
- What is a Security Interest?
- Pledge as Collateral
- Cross Collateralization
- After-Acquired Collateral
Unsecured Loan Definition
- Unencumbered Asset
- What is a Secured Creditor?
- Unsecured Creditor
- What are the benefits of security interests for creditors?
- Limited Recourse Debt
Uniform Commercial Code - Article 9
- What are the common types of security interest in real property (land)?
- What is a mortgage?
- How does a security interest protect the mortgage holder?
- Lis Pendens
- Deficiency Judgment
- What is a Deed of Trust or Security Deed?
- What is a Land Sale Contract?
- What is a security interest in personal property?
- How does one establish a security interest in personal property?
- What is Perfection of a security interest?
- What are the methods of perfecting a security interest in personal property?
- UCC-1 Statement
- How does one establish a security interest in real property (land)?
- Register of Deeds
- What is Automatic Perfection of a security interest?
- What is a Purchase Money Security Interest (PMSI) in consumer goods?
- What is a Purchase Money Grace Period for a PMSI in non-consumer goods?
- How does one continue perfection of a PMSI in non-consumer goods?
- What is Temporary Automatic Perfection in Proceeds from the sale of goods?
- How is a security interest created in Assignment of Accounts Receivable and Contract Rights?
- How does one perfect a security interest by Possession of the collateral?
- How does on perfect a security interest by Control of collateral?
- How does one perfect a security interest by Filing a Financing Statement?
- What authorization is required to file a financing statement?
- Where is the appropriate office to file a financing statement?
- Continuation Statement
- What is Priority of a security interest?
- What role does perfection play in establishing the Priority of a secured party?
- What are the common conflicts arising as to priority of a security interest?
- What is the priority of parties secured by common law and statutory liens?
- Lien - Definition
- Blanket Lien Definition
- Unperfected Lien
- Possessory Lien
- Non-Possessory Lien
- Tax Lien
- Mechanics Lien Definition
- Construction Lien
- Cloud on Title
- What is the priority of a buyer of collateral that is subject to a security interest?
- What is required to be a buyer in the ordinary course of business?
- How does 9-320(b) protect consumers who purchase goods from other consumers?
- What is the Shelter Principle?
- What are the general Priority Rules for Conflicting security interests?
- Subordination Agreement
- Who has Priority in Proceeds from the sale of collateral?
- What is a secured party's priority in future advances to a debtor?
- What is the priority of a PMSI in goods (other than inventory and livestock)?
- What is the priority of a PMSI in inventory?
- What is the priority of conflicting PMSIs?
- What is the priority of security interests in fixtures?
- What is the scope of fixture priority rules?