RECOVERING YOUR REAL ESTATE SOLD ON A LAND CONTRACT DUE TO NON-PAYMENT MAY NOT BE AS QUICK OR EASY AS YOU THINK
One process available to recover real estate sold on a land contract for non-payment is through an Action for Land Contract Forfeiture. Unfortunately, many property owners are unaware of the extent of the process to recover their real estate at the time they enter into the land contract.
While there are two (2) methods available, in my practice, I find that the forfeiture process is utilized most frequently. In general, the process begins with the issuance of written notice of the forfeiture. This written notice typically provides the land contract vendee with fifteen (15) days to become current with his/her/their missed payments.
If the land contract vendee fails to make the payments within the requisite fifteen (15) day time period, the land contract vendor can file a summary proceeding with the Court. I highly recommend that the vendor engage a title company to perform a search prior to filing with the Court to make certain the vendee has not encumbered the property with IRS, State of Michigan, Construction Lien or other lien. Following the filing, a court date is scheduled (usually within approximately fourteen (14) days of the filing date) and process must be served on the land contract vendee (cannot be served by attachment).
The parties then appear and court on the date and time scheduled and a short hearing occurs. Assuming the land contract vendor prevails, a Judgment is entered providing the land contract vendee with ninety (90) days (one hundred eighty (180) days if more than 50% has been paid on the contract price) to make the payments specified in the Judgment. Often times, no further payments are made to the vendor. Following the expiration of the 90/180 day redemption period, if the vendee again fails to make the payments, the vendor must again return to court to obtain a writ and engage a court officer to serve the writ. Following service, a certified copy of the writ/proof of service must be recorded with the Register of Deeds to cure any defect in the title.
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more than 50% has been paid on the contract price ? Can you explain in detail further , maybe give an example
They will get 6 months to pay up anything lacking or correct issue before losing right to redeem.
More so the further explanation of determine the 50% less than or greater of the purchase/contract price. Is that any payments made minus taxes insurance court cost etc ….equalling of ?
Sorry, not sure what you are asking. The 1/2 in a land contract legal action is the balance on the LK. If you paid the taxes then you generally can add to the balance, IF the land contract states so. Would need to see it.
A person bought a house from me on a land contract he failed to makes payments he abandoned the house 4 years ag
o we are unable to locate him how do we get him off of register of deeds showing him as contract holder
Need to do forfeiture action or quiet title action. If in Michigan’s Great Lakes Bay area give us a call.
If what you are saying is fact ….then My attorney is wrong in telling me that I can foreclose in a manner of days since we have already served him with the 15 day notice and he has not satisfied those conditions?
What is YOUR view on the matter?….He is 5 months in arrears, has not paid last years taxes and pays the house insurance sporadically every time he gets a cancellation notice.
I would need to know more to give you a legal opinion.
If you want a second opinion we could offer such.
If the purchaser chooses to walk away from the Land Contract, do you still need to wait the 15 days to go to court to terminate the land contract? Can the buyer just provide you with a notarized document stating that they no longer want the home?
Generally best to get a quit claim deed after ordering a title search to see if there are any liens that have been attached due to the actions of the Land Contract Vendee.
What does the process look like if the buyer pays the money due at the end of the 90 day remedy period, but has not kept current on payments due during the remedy period and then fails to pay again? Does a seller have no option but to go through forfeiture proceedings every time the buyer fails to pay?
Forfeiture has its limitations and this is one of them.
I am selling vacant land on a land contract. The buyer has defalted on payments. I sent him via first class mail/ certified mail a forfieture notice form DC101. He responded ” I am willing to sign a quit claim deed and give the property back to you if so desired.” Is this sufficent to reclaim the property? Thank you Lou
This requires specific legal advice that cannot be given in this format. Suggest seeking opinion of attorney, if you have not already.
if a vendee wants to walk away from a land contract will a quit claim deed clear the title for resale if there are no other issues?
thanks
Possibly. A quit claim deed gives someone ownership, but it is only the ownership that the person giving the QCD had. If it was clouded with tax liens, then you get a title with tax liens. If it has property taxes owing, then you get a parcel with property taxes owing on it. It is the least beneficial deed to receive and if you are paying significant $$$, one should never except at QCD in our opinion.
What if the buyer defaults on multiple payments and terms of the LC, passes away with no will, no spouse and no children? Is the same forfeiture process followed?
Wow.
In Michigan, you would mostly likely have to open a probate administration so there is a person to accept legal service of process and then file a forfeiture. We are handling two of these exact situations right now. If you are in the Great Lakes Bay area, give Attorney Dalek a call in our Saginaw office.
In mentioning liens, does this only refer
to liens recorded with Register of Deeds?
Generally, yes. You cannot enforce a non-recorded lien for the most part, if not recorded. You would need a judgment or some other legal action to be taken first.
The land contract was breached by the buyer because he failed to get and keep insurance on the property as stated in the contract (and then burned the garage down). I can start the process legally but the only forms I’m finding have to do with non-payment. Is there a more appropriate form or can I edit the one I found to fit my situation?
Okay, this is seeking specific legal advice. You need to use an attorney because there are multiple ways to attack this situation. If you are in the Great Lakes Bay area, we may be able to assist you.