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Forfeiture - Foreclosure of Land Contracts

Posted on: 15th Apr, 2004 01:17 am
Forfeiture is a kind of foreclosure carried out in case of land contracts mostly. A land contract is a real estate contract in which the buyer agrees to pay the balance of the purchase price to the seller and in return the latter offers him a deed when the contract is paid in full. The seller retains title to the property till the contract is fully repaid.

There are various reasons behind initiating forfeiture. The seller often starts this legal process when the buyer does not fulfill the obligations of the contract or if the latter stops making payments of the land contracts. For instance, the buyer may fail to keep in good repair condition. Forfeiture may also be initiated if the buyer intends to sell off the property to a third party without an approval from the lender.

Prior to the action of the forfeiture, the seller sends a 30 day written notice to the buyer. This notice must meet the following requirements.
  • The notice must be in writing.

  • It should state the details of the contract and describe the features of the property.

  • The notice must state the terms which the buyer could not fulfill.

  • The notice affirms that the buyer has to meet his obligations or else the contract will be forfeited.

  • The legal notice should state the amount of attorney fees claimed by the seller.
The 30 day notice gives the buyer the opportunity to clear his payments and satisfy the obligations within this time period. If the buyer fails to cure his default within this time limit, the seller regains ownership of the property and keeps all the buyer's payments. If the buyer defaults again, the seller will have to issue a second notice called the Declaration of forfeiture. This notice gives him another 30 days to cure the default.

In forfeiture, the seller files an affidavit with the county recorder in order to reflect the change in ownership. Upon successful completion of the legal procedure, the buyer becomes a tenant at will and he may have to leave the property within a few days as stated in the contract. Usually the seller starts off the eviction action by issuing a 3 day notice to the buyer to quit the property.

If a buyer thinks that the seller has incorrectly forfeited the land contract, he can file in response to the eviction petition which deals with the issue of ownership of the property. If the buyer can prove that there is no default in the land contract, then he can stop the forfeiture and regain his ownership rights over the property.

In most cases, where the forfeiture is due to non-payment of monthly installments, the buyer can escape the legal action by paying a substantial amount of the purchase price to the seller. But this is not always guaranteed.
Hi smarie,

As the property is still in your name, then you would be held responsible for the taxes. You can claim the property after you pay off the taxes. I would suggest you to contact a real estate attorney and he would suggest you what steps you need to take in order to reclaim the title.

Thanks
Posted on: 04th Jun, 2010 11:54 pm
Land contracts are deals made between individuals for one part to purchase with a set payment, interest, down payment just as a financial institution. A contract is written with expected date of payment and guidelines for the purchaser to follow most often including maintenance /repairs, carrying home owners insurance, etc..Some require a balloon payoff in a short period of time (in fact most do) while others will allow you to make the payments over 20-30 years with the option of an early payoff without penalties. If you decide to leave a property you have purchased on a land contract the money paid is forfeited and considered "rent" inclding the down payment unless otherwise stated. Follow your contract..that is your only legal standing.
Posted on: 14th Sep, 2010 03:25 pm
While you may be current on your payments you do not necessarily have the right to sell the property yourself. You may be required to have written notification from the original seller of whom you are still paying. If it is not expressly written in the contract you need to work amiably with the seller and an attorney to accomplish that goal just to make sure you are doing everything required in your original contract and by state/county/local laws.
Posted on: 14th Sep, 2010 03:29 pm
I have a land contract and I have fallen behind in payments due to me getting laid off. Then to top it off, my boyfriend left me (contract is solely in my name) with all of the overdue utilities and mortgage. I just started working again last week and they want at least 700 dollars by the end of the month or they will take serious action. I want to pay them back, but there is no way I can get the 700 hundred dollars by the 30th. I don't know what to do. I can pay them back, I just need about a two weeks and not nine days. :( They've already been so good to me for the past several months. I'm just at an end. Is there any hope for me or is this it? Will I be homeless?
Posted on: 21st Sep, 2010 05:28 pm
Hi MorganC,

You should immediately contact your lender and negotiate with him so that he gives you 2 weeks time to pay off the balance amount. If you can convince the lender, he will definitely listen to you and give 2 weeks time.

Thanks,

Jerry
Posted on: 22nd Sep, 2010 02:19 am
We got into a land contract july 2009 the agreement was we get morgaged by feb 2011 Well we got approved for a morgage but it was way less then what they want for the house.Now they are threatning us saying they can take us to court and we will have to pay a bunch of money if we dont try and get approved somewhere else.Is there anything we can do?
Posted on: 10th Nov, 2010 04:31 pm
Hi ashleyreno!

Welcome to forums!

As there is a contract between you and the seller, he has the rights to take you to court if you're unable to get the loan within 2011. If you have a bad credit or any other financial problem, then you should take the help of your friends or relatives and ask anyone of them to cosign for the loan. This might help you in getting a higher amount of mortgage.

Feel free to ask if you've further queries.

Sussane
Posted on: 11th Nov, 2010 01:40 am
I am buying a house on land contract in michigan. I have so far never been late on payments the contract states that i pay the seller 125.00 extra a month to go towards the taxes/ however the seller has not paid the city the taxes owed and they are now behind. What as a buyer can i do? can i sue the seller for defult of the contract and get my down payment and money i have invested into this house because i have a feeling that she is going to end up making me pay the taxes or lose my house please help if you can. I have 7500 invested in the downpayment and housepayments and about 3*5 thouseand in repairs.
Posted on: 27th Nov, 2010 04:04 pm
Welcome aimee,

If you haven't bought the property yet, then you can cancel the deal due to the unpaid taxes. If you have bought the property, then rather than suing the seller, you should start taking steps in order to pay off the tax dues.
Posted on: 28th Nov, 2010 11:04 pm
during a land contract purchase, and the rpoperty had plumming problems after the seller states that the property had no problems move in ready. I asked this at the time of my three thousand down. since then its been terrible.the plumming is more than an inch deep in bathroom and toilet backs up in the tub. The furnace did not work which he replaced but now is not working properly it was used. Over, the first year every other week the toilet was snaked and then a out access was made after there line was
snagged and broke. Im so unhappy as I asked him what was wrong with
the house he was not honest. I was homless at the time. with twodaughters and a grandbaby girl. help what can I do .

the property and he said nother
Posted on: 13th Dec, 2010 01:50 pm
Hi shae!

Welcome to forums!

You should contact an attorney and check out if you can take legal actions against the seller. You should try to sell off the property and try to look for another better property to live in.

Feel free to ask if you've further queries.

Sussane
Posted on: 13th Dec, 2010 08:48 pm
I was selling a piece of property on contract (recorded at the court house) back in 07. The buyers and 3 months behind on payments... cancelled the insurance and not paid 2010 taxes. They then moved out and rented the property to someone else.... They are pocketing the money and not paying me a dime.

I sent a certified letter to the buyers and told them to vacate... Since they moved, is this considered abandonment?
Posted on: 15th Dec, 2010 09:13 pm
Also, since it is recorded at the court house do I have to file a formal "foreclosure"?
Posted on: 15th Dec, 2010 09:16 pm
Hi Mulysa,

It was your rental property. You don't have to foreclose it. You can contact an attorney and terminate the contract with the tenants and check out if you can get other tenants for your property.
Posted on: 16th Dec, 2010 09:33 pm
I done a land contract with a real estate agent and I have a huge Problem. we purchased the house and all payments are made. We have made substantial updates on the property. Now that were ready to finance I found out that this property is not able to have a loan because the city I live in will be buying the house to put in a freeway off ramp. I called the DOT and he assured me that this property will be purchased by the state by June 2011 which is when I am supposed to be re financed by. What am I supposed to do? I have filed a report with the Association of Realtors but they cant give ( legal ) advice. I cant afford the huge retainer a lawyer wants. She NEVER mentioned that the house was gonna be un financiable, is that failure to notify. or breach of contract. I have kids and im scared and dont know what to do. please help me. I really need help

[Email address deleted as per forum rules. Thanks.]
Posted on: 22nd Dec, 2010 09:41 pm
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