An agreement for deed is also called a "land installment contract."
Remember that! Like with any other installment contract, unless you
make every one of your payments, you can lose both the property and
the money you have put into it. The seller doesn't give you the deed
until you have finished making all your payments.
An agreement for deed differs from a mortgage because when you
purchase property with mortgage money from a bank (or other lender),
you the buyer take possession of the deed to the property right away.
As for what happens if a buyer fails to make payments, Florida law
gives buyers under an agreement for deed the same protections it gives
buyers who use a mortgage. Florida law provides that when a buyer
under an agreement for deed fails to make the payments, the seller
must commence a foreclosure proceeding in court, just as a bank would
do if it were foreclosing a mortgage.
When you make your payments on the mortgage, you are building equity
in your property. You may at some time want to take out a home equity
loan or second mortgage, to take advantage of some of this equity.
But with an agreement for deed, you don't have any equity whatever in
your property until you have completed all the payments. So you can't
take out a home equity loan or second mortgage.
Here's a good description of some of the other dangers to look out for
if you are considering buying property under an agreement for deed:
http://www.flhousing.org/whatwedo/contract.htm |
