[IN] How does a land contract work?

Lexi, Chatbot

I understand your concern about wanting to take ownership of the house and pay property taxes. Have you considered consulting with a real estate lawyer to explore different options for transferring the property title?

Lexi, Chatbot

Have you and your wife discussed your long-term plans for the property, such as whether you intend to live in it or use it as an investment?

Lexi, Chatbot

Is there anything else the Real Estate Lawyer should know before I connect you? Rest assured they’ll be able to help with your property transaction.

TJ, Esq.

Hello! My name is TJ and I’m an attorney. Thanks so much for the opportunity to assist you! I’ve gone over the details you shared and I’ll post my initial response shortly. I’ll also post a few quick questions. They’ll help me better understand your situation so I can give you a more complete and tailored answer.

VERY IMPORTANT INFORMATION:

(1) If you don’t hear back from me right away at any time throughout our conversation, please don’t worry — I WILL GET BACK TO YOU! I might be working on your response, helping another customer, or dealing with a tech issue. Depending on what’s happening, it may be several minutes (or more) between messages. That’s normal — you didn’t lose me and our conversation is not over! I’ll always respond UNLESS you ask for a second opinion (since that closes our chat). I really appreciate your patience!

(2) This is general legal info only. I can’t represent you or form an attorney-client relationship.

TJ, Esq.

Hi again! A land contract or a lease-to-own agreement can allow you and your wife to pay the property taxes directly, even without a formal title transfer.

In many cases, these types of agreements can be structured so that the buyer is responsible for paying property taxes as part of their contractual obligations.

This arrangement can help take the hassle of ownership off your father-in-law while still giving you a path to ownership.

Let’s discuss this in more detail so I can provide a thorough response.

Is the home in Indiana?

What are the monthly payments you're considering, and do those payments include an amount for property taxes?

Are there any other parties, like a mortgage lender, involved in the current ownership of the home?

TJ, Esq.

Thanks for the information. It sounds like you want a straightforward arrangement where you handle the property taxes yourself without them being part of the monthly payments to your father-in-law.

We can structure a land contract to reflect that. The contract would state that you're responsible for paying property taxes directly to the county treasurer when they're due.

When you're ready, we can talk about how you'll make sure the homestead exemption is applied so you don't have to pay a higher tax rate.

TJ, Esq.

Thanks for getting back to me. 

TJ, Esq.

It's true that land contracts can have a bad reputation, and for good reason. They are often used in situations where a buyer can't qualify for a traditional mortgage, which can put them in a vulnerable position. But a land contract is just a tool — it can be drafted to be fair and protective of both parties.

We can add clauses addressing your concerns, including responsibility for taxes, maintenance, and default procedures. Since this is a family transaction, trust levels are typically higher, making the arrangement more workable.

Another option is a lease with an option to purchase. This differs in when equitable title transfers and may change tax implications.

The next steps would be to determine the exact terms you and your father-in-law want, such as price, payment schedule, interest (if any), and responsibility allocation. Then a contract can be drafted to match your goals.

TJ, Esq.

Do you need clarification on any of the options I've mentioned?

TJ, Esq.

Thanks for getting back to me. I'm glad you found the information helpful. I can't draft a land contract or any other legal document for you because that would create an attorney-client relationship. I also can't provide a form or template.

However, I can explain what a land contract typically includes — purchase price, down payment, interest rate, payment terms, tax and insurance responsibilities, maintenance duties, default provisions, and when the deed will be transferred.

TJ, Esq.

Thank you for the kind words!

The concept of equitable title is fundamental to a land contract, so it doesn’t have to be separately laid out, although a well-drafted contract will reference it.

In a land contract, the buyer gets equitable title when the contract is signed, giving you a beneficial interest in the property while the seller keeps legal title until full payment.

TJ, Esq.

Let me know if you want to further discuss this or need anything clarified!

TJ, Esq.

You're asking a great question because a lot of people mix these up. They’re very different.

A warranty deed is a legal document that transfers legal ownership. Equitable title is a right or interest — not a document — that gives you the benefits of ownership before legal title transfers.

TJ, Esq.

If you have any legal questions in the future, don’t hesitate to reach out!