Land Contracts
What is a Land Contract in Michigan?
If you’ve been buying or selling real estate in Michigan, you may have come across the term land contract. It sounds simple, but if you don’t know how it works, it can be confusing. At Legacy Title Agency, we help clients every day with land contracts — and today, we’re breaking down exactly what they are, why people use them, and how to protect yourself in the process.
The Basics: What is a Land Contract?
A land contract is a way to sell real estate where essentially the seller provides financing. Instead of a buyer getting a traditional bank loan to pay the seller the full purchase price on the day of closing, the seller agrees to accept payments over time directly from the buyer.
In a normal property sale, a buyer becomes the new legal owner of the real estate on the day of closing, and the seller walks away with all of their money – but in a land contract - The seller keeps legal title to the property until the buyer has fully paid the seller for the property.
At the time of a land contract closing, the buyer gets what’s called “equitable title” — meaning they can live in and use the property, but the deed stays with the seller until all the required payments are made.
It’s a little like “rent-to-own,” but instead of rent, it’s payments toward ownership.
Why Use a Land Contract in Michigan?
Land contracts are fairly common here in Michigan, especially in situations where:
✅ The buyer doesn’t qualify for a traditional mortgage.
✅ The seller wants to expand their pool of buyers.
✅ Both parties want a quicker, simpler closing without bank delays.
✅The buyers and sellers are related parties trying to convey property to each other in a way that minimizes costs to the buyer.
However, there are also risks:
❌ Buyers risk losing the property and potentially all money already paid towards the property if they default on payments.
❌ Sellers must be sure the contract is drafted properly to protect their interests and they have options for how to end land contracts when payment is not being made.
Real-Life Example
Let’s say you’re selling your home, but your buyer can’t secure a mortgage. Instead of losing the sale, you agree to a land contract:
The purchase price is set.
The buyer provides a down payment.
Both parties agree on an interest rate and monthly payments.
You draft and records the agreement to make it official.
The buyer moves in and makes payments. Once the contract is paid off — 🎉 — the deed transfers, and the buyer becomes the official owner.
What will I need to close Land Contracts with Legacy Title
Land Contract Terms - this usually starts with a specific Land Contract Addendum to the Purchase Agreement that details things such as: down payments, the balance to be paid over time, the monthly payment amount, the interest rate, whether or not there will be a balloon payment, the time frame for payment/fulfillment, who is responsible for paying taxes, insurance, association fees, etc., when late fees will be added, when the first payment is due, and more.
Land Contract Document- There are many potential terms in a land contract that are not addressed by land contract addendums and can greatly affect the buyer and sellers' rights, legal remedies and more. It is our recommendation that an attorney prepare and or review this document on behalf of the parties as Legacy Title cannot provide any legal advice or document drafting services.
Option A - Legacy may provide you with our sample Land Contract (provided we are in receipt of all of the agreed upon terms) and fill in the basic land contract terms of the document. Then that document will be sent out for review by all parties in Word (or similar) format for the parties to review and edit as needed.
Option B – Attorney Drafting - Parties may provide their own attorney-prepared Land Contract for review and use at closing.
In either circumstance, we will request this document to be finalized and reviewed by all parties before scheduling a closing. Once it is agreed upon, it will be added to the closing documents to be signed at closing
Deed held in Escrow - Legacy can facilitate the holding of a “Deed in Escrow” where the seller executes the deed to fulfill the land contract and we can hold that deed in escrow until the Land Contract is completed and it is ready to be released.
Memorandum of Land Contract - Legacy will prepare this document to be recorded at closing. Since no deed will be recorded at closing, a document must be recorded to protect the buyer’s interest in the property and put the Land Contract on Record.
Payment Terms - Buyer and seller should discuss the practical aspect of how payments will be made. It is recommended that the parties bring an amortization schedule to closing, which they can sign and exchange amongst themselves.
With us, you don’t just get paperwork — you get peace of mind.
Considering a Land Contract in Michigan?
Whether you’re a buyer or seller, a land contract can be a great solution — but it needs to be handled the right way.
That’s where Legacy Title Agency comes in. We’ve helped countless Michigan buyers and sellers with smooth, stress-free land contract transactions, and we’d be happy to help you too.
📞 Call us today at 248-913-2266 or visit us online at legacyclosings.com to learn more.