I am in a land contract in Ohio. I have been living in the property for three years and the balloon payment is due in Sept. I have been shopping for loans since May and am unable to get a loan. Part of the problem is I only need around 30k and the property is only worth (maybe) 41k. In addition, I had a foreclosure in Nov 2007 and have around 75k in deferred student loans (I am still in school until Aug 2014). I only make around 31k and I pay $200/month child support (ends in June 2014). My only other debt is a car loan which has always been paid on time. The land contract does not have a clause in it to address this situation. The only part of it that is close would be if I stopped making my payments for three months or more.

My question is this, does anyone know what the laws are in Ohio regarding a land contract when the purchaser cannot get a loan after trying in good faith? While I am not overly fond of the house or neighborhood, I want to do what is right and at the same time protect my interest. Thank you for any advise you can offer.

You want to know if there is a law requiring modification of your loan to convert it from a loan due September 1 to a loan with some other terms. I doubt it.

You mentioned that one clause covers the situation in which you would fail to make payments for three months. What does it provide in that event?

Sorry, but the law rarely addresses good faith. This is simple contract law. You signed a contract that states that you are required to pay a balloon payment on x date. It doesn't matter at all why you can't pay, only that you can't. If you default on the contract, then it becomes void and you forfeit all you have paid. Generally such contracts revert to a rental lease on default.

If you can't get a loan you can try renegotiating with the owner/seller for more time. But if they decide not to grant it, then you are stuck.

You are stuck if the lender won't agree to revise the terms of the loan unless you can persuade a bankruptcy judge to do the same thing.

But generally such a "cramdown", for residential property, is not allowed by the Bankruptcy Code.

The issue is, that the balloon note is a payment, the last payment is the full amount, so if you do not pay it, you are in default and they may just take the properly back from you.

It is not the sellers problem, you agreed to selling price, and you agreed to pay them off.

You had better go fast to the seller and ask for an extenstion or a new contract to give you more time. The seller may just take the property back from you for non payment of the loan, since you can not pay that last payment