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srootie01

Land Contract Nightmare

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My husband and I are buying our home on land contract. We purchased this home in Sept. 2007. We have a legal binding contract, however, it does not stipulate who can and cannot claim the taxes and interest. For 2007 and 2008, the sellers have claimed the taxes and insurance. It was not until I emailed you regarding a similar issue did I realize that maybe we are entitled to claim the deductions. The sellers have led us to believe that we are not entitled to claim the deductions b/c the house is still in their name. The problem is my husband and I have already filed our 2008 taxes. Can I amend our taxes and file not only for 2008 taxes and interest, but 2007 as well?

Also, our homeowners insurance is included in our monthly payment. However, it only covers the dwelling of the home and not our contents. We would like to cease paying the sellers insurance and take out our own policy with our insurance company. Not only is the monthly premium cheaper, but our contents would be covered. In addition, we would receive a discount on our auto policy by having all of our insurance needs with one company. However, the sellers are rebuking this concept as well. Case and point, we had an issue back in January where our water pipes froze and busted in our kitchen. We had just put down laminate wood flooring in the kitchen 1 month prior. As a result of the pipes bursting, our faucet and sprayer broke, it separated the back-splash from the wall behind the sink, and it caused our new floor in and around the sink to lift and separate. We had the sellers come out and look at the damage b/c we were considering filing a homeowners claim. The sellers advised us that we could not file a claim b/c based on their assessment, it would cost us less to pay for damage out of our pocket than what the deductible would cost us and they did not want a claim on their policy b/c it would make it go up.

We found out from their insurance agent that the seller opened this policy under the conditions that this was a rental property, not a land contract. Therefore, if the house would destroyed in a natural disaster, they would collect the insurance and we would be out of a house and our contents, not to mention the monies that we have absorbed in the home in the two years we have been there, which comes to the neighborhood of $5,000 dollars.

What are our legal rights and recourse?

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Wow. Let me say this first, INVEST IN A GOOD REAL ESTATE ATTORNEY IN YOUR AREA.

A good attorney will get this issues resolved. Your state law might cover the insurance issues and it may be that you are able to both have insurance on the property.

Check with IRS regarding who is entitled to the deduction. I wouldn't amend your taxes until you get a correct answer.

You may (considering the market) be able to re-negotiate some of the terms of the land contract if you find the seller has taken liberties he/she shouldn't have.

Also, when does the land contract terminate? Do you have a balloon payment at the end?

Consider refinancing if your able and getting rid of this seller. Look into 1st time homebuyer programs (if you qualify) and USDA rural development programs to assist with closing costs and down payments.

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The term of the Land Contract is open ended. Reason being is the home is over 150+ years old and will not qualify for FHA financing and we just don't have the 20% to put down to go conventional.

As far as financing is concerned, this is one area they have been willing to work with us on b/c it is going to be hard to get financing on this home, period! The only reason we considered buying it, is b/c of the location, acreage value and the fact that it is zoned commercial. Ultimately, we will probably just bull-doze the place down and get a construction loan. This seems to be the most advantageous route as far as we are concerned.

So, do you have any advice or links you can reference me to in order to get some concrete answers quickly?

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It depends on your state laws regarding land contracts. I don't know what state you live in but google your states "revised code" and search for land contract laws. You may or may not find your answers.

The FASTEST way to get answers will be to contact a local real estate attorney. Many times you can get a free consult.

Who prepared the land contract? I would assume it was the sellers attorney so finding your own attorney would be in your best interest.

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I'm involved in a land contract also. The contract issuer has tried to tell me "how i should live" here. When he had another buyer for my property...he attempted to force me out. Trying to impose restrictions on my use of the property (a 10+ acre farm) I went over the language of the contract..as long as the property itself is improved...there isn't anything in the contract dictating it's use. the issuers only concern is recieving the payments in a timely fashion.

have you thought about putting your rental payments into escrow, taking them to small claims court (you'll need photos/professional estimates) .Your problem comes back to still dealing with your contract issuer. They can harass you relentlessly with "inspections"...until you get fed up and move. Here , they did that to my neighbor (also land contract)...they settled on a money amount and he left.

you are pretty much in a lose lose situation....if you make waves they'll make you life there miserable....and just replace you as tenants.

the contract isssuer here also tried to "bully"residents on the tax issue...sending out a letter saying they had to have an enourmous amount of deductions to even file long form....then volunteered to deduct the "interest" and the taxes because they would be unable..On my property, the tax bill is in both our names...it just comes to me. but i also have the reciepts for the payments.

you can call the IRS and ask about the tax question without giving your name....just call..you never know, they may go after them.

GOOD LUCK....

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