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Contract For Deed Home Buyers' Rights And ObligationsIllinois Legal ... Form

so if you're closing a seller finance real-estate deal with land contract there's a lot of different details and information that gets baked into these documents and it goes without saying that all most important things you'll have to complete in this process is the actual land contract document itself which is also known as a contract for deed in some areas and this is the like ultimate loan document that lays on all the terms and conditions that both of the buyer and the seller have to adhere to for the life of this long and understandably this is a part of a process it can be really intimidating to a lot of people in a lot of situations out there it makes all the sense in the world for an attorney to take a look at all the information prepare all the documents the whole nine yards but there are some deals out there say if I'm selling our property for a relatively low price and it's just a vacant lot there's not a lot of complexity to the deal in those kind of situations I have no problem felt on my own land contract form simply because I understand how the process works and I know what kind of terms and conditions belong in that document and what I'm willing to accept and there's a service out there that can really come in handy in these kind of transactions and it's called Rocket Lawyer and the thing I like about Rocket Lawyer is that it makes it really really easy to just answer a number of questions and input some information and it generates the full complete document for you which you can download it's like a Word document and you can edit it further if you want to or you can save it as a PDF and just print it off and complete it right there so I'm not necessarily telling you when you should or shouldn't use this kind of service that's really up to you to decide I just want to make you aware that the service is out there and what I want to do in this video is just take you through a hypothetical example of how to use the service to complete a land contract and I think when you use this kind of service especially the first time you're doing it it still makes sense to run it by an attorney just to make sure that all the state specific requirements are met and that it gives you the ability to do a non-judicial foreclosure if your state allows that option just all that kind of stuff that may not be baked into this sort of boilerplate template but if you're in the real estate business and you're doing land contracts I just think it's a good option for you to be aware of so I'm just going to take you through the process and you can see how easy it is and if it looks like a good option for you I do have an affiliate link beneath this video that you can sign up for Rocket Lawyer through and I'll get a small Commission for that and if you do that I thank you very very much for your support and if not that's totally cool too I wish you the best with whatever service or template you're using but if you've got a few minutes follow along and I'll just show you how Rocket Lawyer works so again I have a Rocket Lawyer account so I'm just going to take you through the backend and show you how to get started once you're signed in you can go to this tab over here that says documents and then click here where it says start new and then all you have to do is search for the type of document that you're trying to create and a land contract also goes by the name contract for deed this I'm going to type that in here I'll just type in the word deed and then you can find all these things and this is the one I'm looking for so click on that and then once you're here all you have to do is start answering questions and it will compile the document for you so in this example I'm going to do this in the state of Michigan so it's already on Michigan just click make document and then the first thing here we're just going to say what type of property it is and in my case it's going to be a vacant lot or alternatively you could also pick vacant lot to be used for residential real estate I know that's a really common type of property that I get where it's like a buildable lot and the only thing you can do with it is build a house on it I want to go with this one here and then right here we're just going to put in the physical address of the property so I'm just going to make up an example here and I'll do 4 8 906 I could continue and then who is selling the property in this case I'm going to say that I'm the seller and I'll just put in my name here or alternatively if I was selling this in the name of my company I could put that in here too ABC company LLC something like that in fact let's go with that because that's usually the way it might deals work then we'll click business here and then who will sign this contract for deed for ABC company in this case I'm just going to put in my name because I'm a signer on behalf of a company and I'm the manager of my LLC if you've got an LLC like I do the title kind of depends on how your operating agreement is set up if you have one you could also put in mem over here if you want it to but mine is set up so that I am the manager and I control everything so that's why I'm putting that there and what is the physical street address of ABC company this is where I'll just put in my actual street address and there it is and then wait continue and then where will this seller sign a contract for deed this is just asking where I am going to be located when I sign the document because that determines who the notary is going to be and just so you know if you wanted to you could skip this step altogether by just clicking skip and then all it would do is in the end document there would just be a blank there and somebody would have to write it in by hand but since I know you know where I'm going to be most likely when I sign this I'll just go ahead and put that in here so I'll put in Michigan and then Kent County then continue and then who is the first person that will witness this seller signing the contract for deed I don't necessarily know this yet but I do know that they're most likely going to be in the state of Michigan so I'll just put that there and then hit continue and then seller has just got ABC company like that and then who is buying the property this is where we put in the name of our buyer slash bar work so we'll just make up a name here John Smith and this will just be a single person if you wanted to put this in the name of a husband and wife you could you know check that or business or trust but I'll just keep it simple into a single person here now this is where we put the physical address of our buyer so this would be wherever they live or work or want to receive any kind of notification about the payments on this property so I'll just make up another street address here and then a where will John Smith sign the contract for deed we're going to say that he's going to do this in Michigan in Wayne County and by the way if you ever get stuck on anything in this documents a few just don't understand what you're supposed to be putting in here or if you don't understand what it's telling you to do with each item Rocket Lawyer makes it very easy to just ask a one-off question about that item to an actual attorney and then they will get you that answer back usually within the same day just keep that in mind usually each one of these items does a really good job of explaining what you're supposed to do but if you come across something that just doesn't make sense feel free to ask a question that's part of what you're getting as the cost to your membership and then this thing is the same deal where we're just going to put Michigan and leave the rest blank and then we're going to just hit continue and then one will the contract become effective we're going to say that we're going to close this deal on May 1 so that will be the date at which all of this stuff is officially set in stone and then what is the legal description of the property being sold under this contract now the legal description is usually a very confusing string of words and numbers typically doesn't make a lot of sense to the layperson but it should look something like Section 10 range five block eight lot fourteen see of Lansing sometimes a legal description will be very short and sweetened to the point and other times it will be very long and complicated but whatever it is you can usually find this on your County website or on the copy of the most recent deed of record or alternatively if you're a subscriber to a service like agent pro 24/7 or real quest a lot of times you can find those legal descriptions in those databases as well it doesn't necessarily have to make sense to you but it should match exactly with what you see on the most recent deed or on the county website because this literally describes what property is being transferred so this is definitely a part of the document that you do not want to mess up so just keep that in mind and hit continue and then who should the payments under this contract and made to in this case if you're going to be using a loan servicing company you would put their name and address in here or if you're going to be servicing it yourself by collecting physical checks in the mail or having them automatically why are the funds from their bank account or from their credit card in those cases then you would put your name and address here so in this experiment I'm going to assume the latter so I'll put my company name in here put the address in there and hit continue and then what is the total purchase price of the property sold under this contract keep in mind this is not just a loan amount this is the total purchase price so in this example I'm going to say it's $25,000 continue and then will the buyer have to pay interest under this contract yes I almost always do nine point nine nine percent interest on mine but there have been times when I've done 0% or had other percentages whatever you want to do here is obviously completely up to you for the beginning date we're going to make it the same as the closing date so we'll put May 1 in here and then has a down payment or any earnest money been made in this example we're going to say yes I almost always require some kind of down payment when I sell a property and the amount in this case we're going to say it's 5000 bucks which will make the loan amount exactly 20,000 and then what are the payment terms and all of my experience I've always done this top one here installment payments of principal and interest but if for some reason you want to do something different you can obviously choose a different option here what does the payment agreement this is really just saying what the payments are going to be and if there's going to be a balloon payment at the end and how long it's going to take them to pay it off depending on the loan amount I'll usually make the term of mine anywhere from three years to ten years at the very most I kind of decide on that number based on how much the borrower is willing to pay per month and how much they can afford along with how quickly I need to get my cash back in this case I'm going to say that it's going to be a five-year term which is the same as 60 months and balloon amount is going to be nothing I'm just going to get sixty equal payments and then get this thing paid off and then type of installments this is going to be monthly and we'll hit continue and then we'll a late fee be terrorized if an installment payment is late I always say yes just because it's kind of a disincentive for somebody to miss a payment or pay late so I'm going to keep it as yes and then the amount that I'll put in here is just 25 bucks I'm going to give this person a grace period of what the heck we'll just say five days and then for this one we're going to give them an extra ten days so basically they have until the fifth of each month before their payment is considered late and they owe an extra $25 late fee and then they have until the 15th of that month until it's considered in default and we can actually take some action against them and I'm obviously not saying you have to use these numbers that's just what I would do in my situation if you want to do something else and follow a different timeline with different consequences you can obviously feel free to plug in some different numbers here once that's done we'll click and here can early payments be made without penalty we're going to say yes and then what type of early payment will be accepted unless say any amount and then will the buyer receive a discount if the contract is paid off early I'm going to say no but if you want to you could do that obviously is there any debt tied to this property in my case I always own all my properties free and clear and if I don't I'm not going to attach another loan to them so in my case I'm always going to say no but if you've got a different situation then you could obviously answer it differently well the seller be allowed to use the property as collateral on future loans so basically this would just mean that if I still own the property and it wasn't paid off could I also tie up this property to take out another loan and I just kind of think that's sort of uncool to the borrower because that would mean that the property that they are paying for in thinking they're going to own could potentially be taken before they paid it off which i think is just kind of a sleazy thing to do so I'm always going to say no on this and then who will have possession in use of the property until the contract is paid in full this is pretty much always going to be the buyer but if for some reason you wanted to say no buyer you can't even touch the stand till it's completely paid off then you could also say this instead but usually I set mine up this way so I'm going to go ahead and make it like that move forward and then has the seller agreed to perform any specific repairs to the property and I'm pretty much always going to say no it's being sold as is and then who will be responsible for maintaining insurance when you're dealing with vacant land insurance is not usually a huge issue if this was a house and a lot more things could go wrong with it then the insurance cost would be a lot higher and it would be something that you would probably want to have more negotiation on whether it's going to be paid by the buyer or the seller but a lot of times with the vacant land if you even do get insurance it's like very very very cheap so for that kind of property whoever does end up footing this bill it's usually not a huge deal one way or another and then who will be responsible for paying taxes assessed for the sale of this contract I'm going to say this and then usually what I do is I'll have the buyer actually pay me an additional amount each month which I just store in an escrow account and then I'm the one that actually pays the tax bill but they are essentially paying me so that I can pay that bill so that's kind of how I have and set up just so that I can be a hundred percent sure that it's getting handled is that I make them pay me a little extra and then I pay the bill for them because a lot of times these buyers are going to forget or they're going to do it late and as long as I am technically the owner of that property I don't want this being left to chance I want to make absolutely sure those taxes are being paid current so that's how I'm gonna do mine and set mine up and then who will be responsible for paying real estate taxes and assessments through the term of this contract will say buyer again and then what type of deed will be used to convey the property to the buyer upon completion of the contract terms this really just depends on how certain I am about the clearness of the title so for example if when I bought it I got title insurance and I know that this thing is clear and there are no issues in cases like that I would choose either like a warranty deed or a special warranty deed but if it's a property that perhaps recently went through a tax sale or perhaps if I did not do all that thorough of a job of doing a title search on the front end and I'm just not ready to put my neck on the line and promise somebody that the title is clear in those cases I would choose something like this I've got another video and some stuff on the blog that talks about some of the differences between these two types of Deeds so if you're not really sure about that feel free to check out that video but in this case I'm just going to pretend that I didn't do all that thorough of a job with the title search I just looked at the most recent deed and that was it and because of that I'm not ready to do a warranty deed at the very most I might do this which just guarantees that there were no new title issues that came up during the time period when I owned it but even that I don't know if you want to have absolutely no liability attached to yourself you would do the quick claim deed and some buyers are not going to be ok with that but if they don't care it's the least risk way for you to do it so that's what I'm going to go with here and then who'll be responsible for the cost of recording the deed will say a buyer and they're going to pay that money to us and then we will get it recorded after the closing who will be entitled to claim the property for tax purposes let's say the buyer in this case but obviously you could do either one if you want and then which state's laws will apply to this contract and in my case I'm also in Michigan as well as the property is so I'm just going to say Michigan and then enter any special provisions you would like included in this contract but I'm just going to skip this part for now because it doesn't really apply in my example here and then who is preparing this contract for deed I'll put myself and then continue and now it is creating my contract for me and so once this document has been generated you can go here and let's just download a PDF of it to take a closer look at how it reads and then we can scroll through it here but if you read through this document carefully especially the first time just so you understand what it says it really just outlines the terms of the loan agreement and it has all the information that you put in there and answered earlier on it looks like it actually calculated the payment for us automatically sometimes you'll have to manually put that number in but this particular form looks like it just did it by default that's kind of nice and you just kind of want to go through here if when you're going through this document you come across anything that you want to change or edit or get rid of or anything like that it's really very easy to do that you just go back here and then click Edit and then we will do this change answers and then I'm just going to quick scan through this and make sure the answers are right here and then after reviewing that contract I couldn't find any place in there where I was able to fill in this information and that should actually be filled in so I'm just going to go ahead and do that now and essentially all this is saying is that when you get this document signed and notarized by all parties and you mail it to the County Register of Deeds to get recorded where are they supposed to send that original document back after they've you know put their sticker on it and run it through the system so I'm just going to put my location in here because I want them to send it back to me because I'm controlling the flow of this documentation hopefully that all makes sense hopefully I've found that helpful again Rocket Lawyer you don't necessarily have to use it but I've just found it's a lot easier than trying to work with a template because when you have just a straightforward template it gives you a lot of potential areas for you to miss stuff where as you can see with Rocket Lawyer it just literally took you through each item step-by-step and you literally had to tell it if you didn't want to answer a question so you're fully aware of everything you're missing in terms of the cost of Rocket Lawyer it's really not too bad if you go over here to the pricing page you can kind of see at the time of this recording these are what the two options are this is the one I'm doing right now the Premium Subscription and if you want to pay for yearly if you know you're going to use it year-round you can save 20% on that as you can seem it's not necessarily cheap but it's not like horribly expensive either especially compared to the cost of using a lawyer for all these things if it's a simple enough deal and if you know what you're doing it's not too bad to use this to prepare all of your documents for land contracts and things like that so anyway I mean it's it's just an option out there and it's what I'm using right now for a lot of my stuff and it's working pretty well for me so that's that's how you create land contracts with Rocket Lawyer and that's how you can do it too