A land contract offers an alternative pathway to homeownership when traditional bank financing is unavailable. While acquiring a house in the Downriver area is a significant achievement, alternative financing agreements carry substantial legal risks.
A single contractual oversight can result in the loss of both your down payment and your real estate. To protect your financial investment, you must verify three critical items before executing the contract.
Verify the true seller ownership with a title search
You must verify that the seller actually owns the property. A professional title company can perform a search to uncover hidden liens or unpaid property taxes. If the seller owes back taxes to Wayne County, you could lose the home even if you make every payment on time.
Review the specific terms for default and forfeiture
Michigan law protects buyers from instant eviction, but a default still triggers severe penalties. If you miss a payment, the seller must give you a written 15-day notice to pay what you owe.
If you cannot pay, the seller must go to court to start a forfeiture. A judge will then give you a timeline to fix the debt. You get 90 days if you paid less than 50% of the price, current as of June 2026. You get 180 days if you paid 50% or more. If you miss that final deadline, you lose the house and all your equity.
Confirm the status of any underlying bank mortgage
Many sellers still owe money on their original bank loans. You must confirm whether the property has an underlying mortgage before you buy. If the seller stops paying their bank, the lender can foreclose on the house. A standard transaction requires close attention to these parameters:
- Clear title certification
- Fair written redemption timelines
- Proof of underlying mortgage status
These items establish the baseline security for your purchase. Too many buyers make mistakes because they trust a casual handshake.
Protect your home equity before you sign the deed
A real estate purchase represents a major long-term asset for your family. Reviewing the transaction documents step by step ensures that you understand your long-term obligations. Consulting with a local real estate attorney is the most effective way to safeguard your funds, your legal rights and your future home.