Thinking about buying a home in Kalamazoo but worried a traditional mortgage will not work right now? You may be hearing about land contracts as a faster, more flexible path. The idea is simple, but the details matter because Michigan treats these deals differently than bank loans. In this guide, you will learn how land contracts work in Michigan, the risks and protections to consider, and a practical checklist tailored to Kalamazoo. Let’s dive in.
What is a land contract
A land contract, also called a contract for deed or seller financing, is an installment sale where the seller finances your purchase. You make a down payment and agreed monthly payments to the seller. The seller keeps legal title until you finish paying, and you hold equitable title with the right to live in and use the home.
How payments and title transfer work
- You and the seller agree on price, down payment, interest rate, and a payment schedule.
- You take possession and start paying principal and interest to the seller.
- When you pay the contract in full, the seller delivers a deed and legal title transfers to you.
How this differs from a mortgage
With a mortgage, you receive legal title on day one and a lender records a mortgage as security. With a land contract, the seller keeps legal title as security until you finish paying.
How it works in Michigan
Land contracts are widely used and recognized in Michigan. You get equitable title and possession, and the seller holds legal title until the final deed is delivered.
Recording matters. You should record the signed land contract, or a memorandum of land contract, with the Kalamazoo County Register of Deeds so your interest appears in public records. Recording helps protect you if a third party later tries to claim an interest in the property.
Property taxes and utilities must be clear in writing. Decide who pays property taxes, and confirm taxes are current with the Kalamazoo County Treasurer. Also check city or township code enforcement and utility billing for any liens or violations that could attach to the property.
Title priority is critical. If the seller has existing mortgages or liens, those stay attached to the legal title. A recorded land contract gives public notice but does not remove earlier liens. Plan a title search and a payoff strategy with the seller before you sign.
Default remedies follow Michigan law and your contract language. Sellers may have options such as forfeiture or foreclosure, and timelines and outcomes can differ. Because these rules are complex, talk with a Michigan real estate attorney before you sign.
Insurance and risk of loss should be spelled out. Even though the seller holds legal title, you will likely need to maintain hazard and liability coverage while you live in the property.
If you hope to refinance later into a traditional mortgage, confirm how and when the seller will deliver legal title and whether the contract allows any needed assignments or early conveyance.
Key risks for Kalamazoo buyers
- Loss of equity on default. If you fall behind and the seller enforces remedies, you may lose possession and the payments you have made.
- Seller debts and new liens. If the seller’s creditors take action, your interest can be harmed, especially if the contract is not recorded.
- Fewer consumer protections than regulated mortgages. Some lender rules do not apply to private sellers.
- Seller bankruptcy complications. A seller’s financial trouble can disrupt your contract.
- Disputes over taxes, insurance, and repairs. Vague language leads to conflict and surprise costs.
Buyer protections to put in writing
Strong contracts reduce risk. Ask your attorney to include:
- Clear payment terms. Spell out principal and interest, an amortization schedule, and any late fees.
- Down payment and prepayment. Show how the down payment is credited and whether early payoff is allowed without penalty.
- Default and cure. Define notice requirements, cure periods, and any acceleration rights.
- Remedies. Clarify if the seller may use forfeiture or foreclosure and your rights to reinstate.
- Escrow for taxes and insurance. Use a neutral escrow or title company to collect and pay these bills on time.
- Clear title requirement. Require the seller to maintain clear title, avoid new liens, and address any existing mortgages with written payoff plans or protections.
- Recording clause. Require recording of the contract or a memorandum at the Kalamazoo County Register of Deeds, and state who pays recording fees.
- Possession and condition. Confirm when you take possession, inspection rights, and who handles repairs and maintenance.
- Insurance and casualty. Define who carries insurance and how insurance proceeds are applied after a covered loss.
- Assignment and sale. Set rules for whether you or the seller can assign the contract to someone else.
- Right to reconvey. State exactly when and how the seller will deliver the deed upon payoff.
Title insurance and surveys
Title insurance is advisable. A title commitment will identify liens, easements, and exceptions so you know what you are buying. Ask about timing and structure, since legal title stays with the seller during the contract. Order a survey if there are questions about boundaries, access, or encroachments.
Due diligence and closing checklist
Use this Kalamazoo-focused checklist to protect yourself.
Before you sign
- Title search. Order a full title search through a reputable title company to identify mortgages, liens, easements, and judgments.
- Recording check. Confirm with the Kalamazoo County Register of Deeds how the land contract or memorandum will be recorded and the fees.
- Property taxes. Verify current and past tax payments with the Kalamazoo County Treasurer and local assessor.
- Municipal records. Check city or township code enforcement, building permits, and utility billing for liens or violations.
- Survey. Obtain or update a boundary survey if there are any questions.
- Home inspection. Hire a professional inspection and build repair terms into the contract if needed.
- Hazard and environmental items. Check floodplain status and any known environmental issues as appropriate.
- Seller mortgages. Obtain written payoff information or an escrow plan to protect your interest if the seller has a mortgage.
What to negotiate in the contract
- Purchase price, down payment, interest rate, amortization, and any balloon payment.
- Payment due dates, grace periods, late fees, and acceptable payment methods.
- Default notice and cure periods, and the exact steps to reinstate.
- Taxes and insurance responsibilities and whether an escrow account will be used.
- Repairs and maintenance responsibilities and occupancy rights.
- Recording, title, and whether a title policy will be issued at final conveyance.
- Prepayment rights, assignment rules, and any limits on seller assignment.
- Remedies and dispute resolution, including venue in Kalamazoo County courts.
Closing and after closing
- Recording. File the land contract or a memorandum at the Register of Deeds and keep proof of recording.
- Set up escrow. Establish the tax and insurance escrow if your contract requires it.
- Keep records. Maintain copies of the contract, a payment ledger, and receipts for taxes and insurance.
- Monitor title and taxes. Periodically confirm taxes are paid and no new liens have appeared.
- Plan for the deed. Know the exact payoff process, documents, and timing for deed delivery.
Practical tips to make it work
- Compare the total cost of credit. Look at the interest rate, amortization, and any balloon to understand your true cost versus a mortgage.
- Build a refinance plan. If you aim to refinance, set calendar reminders to update income, credit, and debt levels well before any balloon date.
- Automate payments. Use a reliable payment method and keep a paper trail for every payment.
- Do not skip inspections. Hidden repairs can become your responsibility once you take possession.
- Communicate early. If a payment issue comes up, contact the seller quickly and follow any cure process in the contract.
Local Kalamazoo resources
- Kalamazoo County Register of Deeds for recording and land records.
- Kalamazoo County Treasurer for tax status and payment history.
- City of Kalamazoo or your township assessor and code enforcement for permits, violations, and utility liens.
- Kalamazoo County GIS and parcel viewers for parcel lines and ownership data.
- Local title companies and Michigan real estate attorneys for title searches, title insurance, contract drafting, and escrow services.
- Legal Services of South Central Michigan and Michigan Legal Help for consumer guidance and possible low-cost legal help if you qualify.
- Community housing counseling organizations for pre-purchase education and financing alternatives.
When to bring in professionals
Before you sign, speak with a Michigan real estate attorney about the contract terms and default remedies. Loop in a local title company to run a full title search and advise on title insurance. If you want market context, price guidance, and negotiation support, connect with a knowledgeable local real estate team that can coordinate inspections, title work, and escrow with the right professionals.
Ready to explore whether a land contract fits your path to homeownership in Kalamazoo? Reach out to Atwood Properties Group for local guidance on properties, pricing, and contract strategy, and to connect with trusted title and legal resources. Get your instant home valuation if you also plan to sell while you buy.
FAQs
What is a Michigan land contract and how is it different from a mortgage?
- Under a land contract, the seller keeps legal title until you finish paying, while a mortgage gives you legal title at closing with a lender holding a mortgage as security.
Should I record a land contract in Kalamazoo County?
- Yes. Recording the contract, or a memorandum, with the Kalamazoo County Register of Deeds provides public notice of your interest and adds protection.
Who pays property taxes and insurance under a land contract?
- The contract should state this clearly. Many buyers pay both and use an escrow arrangement to ensure bills are paid on time.
Can the seller take out a new mortgage after I sign a land contract?
- It is possible if the contract is not recorded or the contract allows it. Recording and clear title protections in your contract reduce this risk.
Can I get title insurance on a land contract in Kalamazoo?
- Often yes, depending on the title company and how the deal is structured. Ask for a title commitment early to uncover liens and exceptions.
What happens if I miss payments on a Michigan land contract?
- Remedies depend on your contract and Michigan law. Sellers may seek forfeiture or other remedies, so include clear notice and cure periods in your contract.
When can I refinance a land contract into a traditional mortgage?
- You typically refinance after meeting lender requirements and arranging for deed transfer under the contract. Confirm the timing and process before you sign.
