Can the buyer be sued for defaulting on the Land Contract agreement? Or do they simply lose their down payment and any equity they may have gained in the home?

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Originally Posted by victa_p

Can the buyer be sued for defaulting on the Land Contract agreement? Or do they simply lose their down payment and any equity they may have gained in the home?

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The buyer loses his downpayment and any and all equity he may have built up during the time they were in the home. There is no way legally to get this money back. It would be the same if you got a regular mortgage - no return of downpayment or any payments made on the home.

I think you mean can the "seller" be sued... by the "buyer"...

First, its not a good idea to piggyback your question on someone else's. This can cause confusion so I've moved your post to its own thread.

This is usually spelled out in the contract. There is generally a clause that details what happens in case of default by the buyer. Usually this means the contract reverts to a rental lease and all money paid is forfeited. Usually this will preclude a suit, since the owner/seller will have been compensated for the default.

Of course, every contract can be different so you have to read what is in the contract. If there are no provisions for default, then local contract law will apply.

By the way, in a land sales contract, a buyer doesn't gain equity. Equity in real estate is the different between the value of the property and what is owed against it. Since a land sales contract is not a mortgage and does not constitute a lien on the property the buyer actually has no equity interest until the contract is satisfied and ownership transferred.

In all of the contracts I do, the buyer merely loses everything they paid in, and the contract converts to a rental, If they owe any unpaid rents for the time from default to the time they move out, I will sue for that.

But the contract should spell out exactly what is allowed.