Land Contract Assumption Question
I am in contact with a seller who owns on duplex on a land contract. Good terms. 6 percent interest, 30 years. Has some equity from payments and appreciation. Talked for a while and he said he would assign the land contract to me if he could get $10,000 out of it. I could give him the 10k but I dont know how one can take over a land contract, if its even possible. He told me the seller who sold to him is a close friend and wouldnt mind me taking over if it helped him get out of it. He even said his friend may reduce the interest rate a little to make it work. Barring the actual numbers, which are fine, can I make this work if both the seller and land contract grantor are both in agreement? Besides some title or attorney fees to make the switch, it could be a cheap deal for me to get into.
Greetings Bill,
If the original seller is willing to work with the person who has the Land Contract, why not just have them do a new Land Contract in your name, and cancel the existing one? It might be cleaner than do an assignment.
Just keep in mind that the person who currently has the Land Contract, while they don’t have title, they do have equitable interest. So, you would also need a Quitclaim Deed from them relinquishing any interests they may have.
Also, if you do a new Land Contract in your name, make sure it’s recordable. Sometimes the contract itself says it cannot be recorded. However, that’s not legal in some states.
Just my initial thoughts.
Thanks that makes sense to just do a new one. So if they cancel their land contract together (which is recorded), the original owner just assumes all ownership again? If the LC is cancelled why would I need the quit clain deed?
Well, I’m no attorney, and I do get a bit paranoid on these types of things. But I would want a Quitclaim just to prevent the person who has the LC now from ever trying to claim any interest in the property.
I just did this very thing on a property I’m selling on a LO, and the couple (boyfriend/girlfriend) is no longer together. I got a Quitclaim from the Ex-girlfriend, just so she can’t come back after me down the road claiming equitable interest, or she didn’t have the opportunity to exercise the option, or that she wants her half of their Option Consideration back, or whatever.
As I said, I’m a bit paranoid and don’t really put much of anything past anyone.
Just my 2¢
: )