If you cannot qualify for a traditional mortgage, a land installment contract may provide an alternative way to purchase property directly from the seller. However, this arrangement differs from a standard home purchase because you usually make installment payments before receiving the deed.
Before you sign, you need to understand what the contract must include and what rights you may have if problems arise.
Required terms to review
To protect your interests, Ohio law requires these agreements to include specific terms, such as:
- The full names and addresses of the buyer and seller
- A legal description of the property
- The total purchase price and down payment
- The interest rate and payment schedule
- Any charges, fees or late payment terms
- Any existing mortgage or other encumbrance on the property
- Who is responsible for taxes, assessments and insurance
- Whether any public agency has issued pending orders against the property
A remaining mortgage can create significant risk because the lender may pursue foreclosure against the property if the seller stops making mortgage payments, even while your own installments remain current. You should also check whether the agreement makes you responsible for upkeep and major repairs before you receive the deed.
The seller must also ensure that a copy of the signed contract is recorded with the county recorder within 20 days.
Why annual statements matter
State law requires the seller to give you a statement at least once a year, or on request up to twice a year. This statement should show how much went toward principal and interest, along with the remaining balance.
They may also become important if there is a dispute over missed installments, fees or the amount still owed.
What happens if you default?
If you fall behind, Ohio law typically gives you 30 days to catch up on payments and “cure” the default. If you do so, the seller cannot enforce forfeiture. If you cannot catch up, your protections depend on your equity:
- 5+ years or 20%+ paid: The seller must use foreclosure and a judicial sale to recover the property.
- Less than 5 years or 20% paid: The seller may pursue forfeiture after the required notice period.
By understanding your rights under state law and keeping diligent records, you can better protect your equity and your future interest in the property.