Land Sale Contracts

What is an Installment Sale Land Contract?

An instalment sales contract refers to any contract relating to periodic payments.
However, in real estate, it is often called a contract for sale, land contract, or contract for deed. Contrary to the misleading term “land,” a land contract can be used to buy any form of real estate, whether it is with or without improvements. In an instalment sales contract, there are details about the sales price, interest rate, amount of down payment, and amount of periodic (monthly payments) as well as the responsibilities of the parties involved. It encompasses such duties as who will maintain the property, pay for property tax and insurance. Such responsibilities usually fall on the buyer. The contract will also include the legal course of action for the seller if the buyer does not make timely instalment payments.

How it Works

Contracts for deed or land contracts are a security agreement and involves a seller (Vendor) and a buyer (Vendee)
The vendor consents to sell a property through financing the property for the Vendee
The Vendor will retain legal title while the Vendee acquires an equitable title
The owner-carried financing may involve a pre-existing mortgage balance, or the title of the property can be free and clear, which is the best option
The Vendee will receive a deed to the property from the Vendor when the payment is complete

Sierra Leone Statute for Land Installment Contracts

The Sierra Leone statute deals expressly with land installment contracts. A seller must carefully review and follow the statutory regulations. The absence to follow these provisions could make the seller liable to the purchaser for a significant amount of money. For example, the seller must ensure that the contract is a written one; that it comprises certain details specified in the law; that a copy of the contract is given to the buyer; and that the contract is documented in the land records of the county where the property is situated. The failure of the seller to comply with these provisions may enable the buyer to void the land instalment contract as well as make a demand to return all payments made to date. Moreover, it is the responsibility of the seller to provide an annual statement accounting for all buyer payment instalments.

Due to these legal stipulations, the use of land installment contracts is rare in the sale and purchase of personal residences. Rather, a seller will usually finance the residence through a “take-back” mortgage for the unpaid portion of the purchase price. A “take-back” mortgage by a seller will have priority over legal claims or federal tax liens, which the buyer is liable to pay. In this case, the meaning of “priority” is that if the seller remains unpaid and has to foreclose the mortgage, the funds from a foreclosure sale will initially be used towards the seller’s mortgage. The excess proceeds (if any) remaining after the payment of the first mortgage and foreclosure expenses will be used to pay off federal tax liens and judgment creditors. Certain municipal or county liens, such as water bills and real estate taxes, have priority over all types of mortgages, which include seller take-back mortgages. It is fundamental for the seller to cautiously weigh all their options before financing real estate for a buyer with a poor credit score, particularly if there are tax liens or creditor judgments recorded against them.
Foreclosure is often cumbersome, expensive, and time-consuming. It may be impossible to collect foreclosure costs. At times, it may be a better idea to sell for a less amount to a buyer who is sure to pay the purchase price.

All-inclusive (Wrap-around) Land Contracts

An existing mortgage is a part of wrap-around contracts. The Vendee will make one payment to the Vendor. The Vendor, on receipt of the payment, clears the underlying lender’s payment and keeps the remaining amount.
If the rate of interest on the existing mortgage is lower than the interest rate stated in the contract, the Vendor stands to earn additional interest on this money, which does not belong to them. This situation is called an override.

Straight Contracts

A straight contract does not have any override of interest. In a straight contract, the Vendee can choose to make a direct payment to an existing lender and pay the Vendor separately, or the Vendee can agree to make one payment to the Vendor, and then the Vendor pays the underlying lender.

Foreclosure under the Power of Sale

There are certain title companies that draft and insure contracts for deed that comprise a Trustee, a Vendor, and a Vendee. You might need to research and identify such title companies. This works similar to a trustor in a trust deed. The trustee will be assigned right, interest, and title by the Vendor and Vendee with the objective of securing both parties’ obligations.
If the Vendee discontinues making payments, the Trustee will have the power to foreclose the property under the power of sale. However, the process of filing a notice of default differs between states.

Rights of the Vendee

The Vendee, for all practical purposes, owns the property and has the following rights:

Possession
Right to quiet enjoyment and use of the residence
Exclusion, forcing trespassers to leave the property
Resale

Advantages for the Vendee

No qualifying necessary, although the seller could ask for the buyer for a copy of their credit
Flexible down payment amount, this payment is negotiable
The interest rate, length of the contract for sale, and installments are negotiable
Reduced closing costs due to no involvement of lender fees
Fast closing within seven days or less

Advantages for the Vendor

Relatively higher sales price with no appraisals, but it is advisable for buyers to get an appraisal done
If taxable, the sales proceeds may be eligible to qualify as a deferred gain
Monthly earnings
Typically, a higher rate of return compared to placing funds in money market accounts
Quick closing

Things to Do for Buyers

Buyers should obtain an appraisal as well as title insurance for the property. They should identify a holding company to take possession of the original paperwork and executed deed.
It is a very good idea for buyers to consult with an experienced real estate attorney for more clarity on the do’s and don’ts when purchasing a property.

Things to Do for Sellers

Sellers should review the credit report of the buyer. The existing insurance policy should include the names of both the Vendee and the Vendor. It is critical for sellers to engage a disbursement company to manage contract collection.
Sellers should also consult a skilled real estate attorney to ensure that their interests are fully protected throughout the sales process.

Talk to an Experienced Real Estate Lawyer

An experienced real estate attorney at Afrion Law Firm can assist you every step of the way in your sale or purchase process. By taking the right measures and precautions in your selling or buying transaction, you can ensure a smoother and more seamless transaction. Message us online or call our office today at +23231567551 or info@agbl.team for a free consultation

Litigation Involving Banks

Our experienced litigators have helped settle and litigate disputes related to promissory notes, commercial loan agreements, deeds of trust, trustee sales, personal guarantees, assignments of rent, and deficiency actions.

Landlord tenant Disputes

Disputes between property owners and tenants are common, and it often takes the intervention of a third party to get them resolved. We have helped clients deal with issues related to eviction proceedings, lease interpretation, and other disputes.

Title Disputes

When something is holding up your closing, this can be frustrating. Our real estate attorneys can help resolve title disputes concerning property lines, easements, adverse possession, trespass, quiet title, and more.

Negligent Design

Negligent design is a legal issue that can impact a variety of industries. Building codes address what is considered sound design, and some projects slip through the cracks, creating issues relative to accessibility, structural integrity, and environmental impact. This can affect the owners and tenants of both new and existing properties, and litigation can be a complex matter. These are only a few of the most common types of disputes involving real estate. These are only a few of the most common types of disputes involving real estate. Our attorneys have the background and resources to handle even the most obscure issue, and we urge you to contact us about our services.

The Tenacity and Discipline to Get the Best Possible Results

When it comes to approaching real estate disputes, our attorneys have the background, research, and trial skills required to pursue the best possible outcome for your real estate matter. We have learned that a combination of tenacity and discipline are needed to get to the heart of issues involved in a property dispute. Our legal team will examine the circumstances of your case, develop a strategy that aligns with your goals, and seek a positive resolution to your dispute. We routinely pursue opportunities in the best interests of our clients through the effective use of early motions, and we possess broad experience in all types of alternative dispute resolution, i.e. mediation and arbitration. But when these methods fail to get you the results you require, our litigators will aggressively represent your interests in court. Our goal is always to achieve your real estate transaction objectives, keeping in mind any budget concerns.

Ownership Transactions

Afrion Law Firm Group Attorneys Handling Land Contracts

The real estate attorneys at the Afrion Law Firm Group routinely handle ownership transactions on behalf
of individuals, families, and businesses in Sierra Leone, West Africa

Successful ownership transactions take into consideration buyer and seller goals, and effectively
translate those goals into legal reality. Our attorneys handle ownership transactions, ensuring our clients’
rights and interests in property are protected and promoted through deeds, contracts, title documents,
contingency agreements, and other real estate transfer instruments.

Land contracts
Offers to purchase
General warranty deeds
Limited warranty deeds
Quitclaim deeds
Trust deeds

Deeds are the legal documents that transfer ownership of real property interests from one party to another. Although deeds are generally short documents, they embody the whole purpose behind the underlying real estate transaction—the transfer of property from one person or entity to another. Even once a real estate contract has been agreed upon and signed, the new property owner does not hold title until a proper deed has been delivered and accepted.

Ownership transactions may involve several different types of deeds, including general warranty deeds, limited warranty deeds, and quitclaim deeds. Land contracts generally provide the type of deed used to convey the property at issue. The deed used will name the buyer, called the grantee, the seller, called the grantor, and provide a legal description of the property. The person transferring the property must sign the deed.

A warranty deed is the most common type of deed used in ownership transactions. With a warranty deed, ownership is transferred to the buyer, and the seller explicitly promises he or she holds good title to the property. The other type of deed used fairly often for real estate transfers is the quitclaim deed. A quitclaim deed transfers any ownership interest the seller has in property, but makes no promises or guarantees about what that interest is or that title is good. Quitclaim deeds are generally used to clear up title problems, transfer property between spouses after a divorce, or in informal transactions between family members or friends.

Help with Complex Ownership Transactions in Siera Leone Real Estate Matters. Ownership transactions can be quite complicated depending on the complexity of the property rights being transferred, the amount of money being exchanged, and government regulations. For more information about our services in the area of ownership transactions, please contact the Afrion Law Firm Group to schedule a consultation with one of our experienced real estate attorneys.

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