Comments on: Installment Land Contract

By: Toby Beavers

Toby Beavers — Fri, 06 Nov 2009 18:16:22 +0000

james – thanks for your input.

Your site has some problems:I clicked onto Learn More
“How We Help With Foreclosures” on your home page and get this link:
http://www.jamesgburns.com/index.php?Itemid=5&option=

Then IE will not allow me back on your site….Very starnge

By: James Burns, Esq.

James Burns, Esq. — Fri, 23 Oct 2009 22:42:43 +0000

Antoine – not true with what your CPA stated. The tax benefit can be preserved under agreement until title is fully transferred which is after fulfillment of the last payment…this is America and people are free to agree.

By: Jon

Jon — Fri, 23 Oct 2009 20:10:27 +0000

Installment land contracts are great when used properly. On my last deal I bought a property using an installment land contract. I was planning to rent the property out but someone made me an offer for a lot more than what I paid for it. This was 1 1/2 months after I got the property. Now, the buyer was using FHA financing but because it was an installment land contract and the owner retains legal title, I drafted the purchase contract between the owner and my end buyer. On the HUD-1, I became just an additonal payee on the seller side. Doing it this way, I did not encounter any title seasoning issue and closing went through with out a hitch.

I used installment land contract in this deal not to get tax benefits but because I needed to ficilitate a fast sale for the owner who was moving to another state and does not want to be saddled with double payments, a rent payment and a mortgage payment. And he did want to be an out state landlord. I think one just needs to know when to use this strategy and when it is used properly it works great.

Lastly, I just want to say Susan keep up the great work. Your site is one of the handful sites that I enjoy going back to again and again.

By: antoine

antoine — Fri, 23 Oct 2009 19:02:47 +0000

I have done a land contract before, and my CPA assured me I was lucky for two reasons:
1. for tax purposes, equitable title means nothing, and only the title holder can use all the tax advantages of the sale ( amortization adn depreciation)
2. if you do a landcontract, make sure you stay on the insurance as that is the way lenders find out the property “chnaged hands”, and they will call the loan
Lastly, the IRS may call you on a 1031 exchnage not done and cost recovery taxes are due immediately if not reinvested within 180 days.

By: Jeffrey Smith

Jeffrey Smith — Fri, 23 Oct 2009 18:58:12 +0000

Check your state laws with a good real estate attorney, because the legal interpretation of the Installment Land Contract (ILC) varies widely.

Upon default, in some states the “buyer” can be evicted just like an ordinary tenant. In other states, the “buyer” has the right to due process for a judicial foreclosure, which can take months while the deadbeat stays in the property making no payments.