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Howard Ain, Troubleshooter: Land Contract Warning
CINCINNATI (Howard Ain) -- Trying to get a home mortgage these days can be very difficult. Requirements have become pretty strict. So many trying to buy a house are turning to land contracts, but as Local 12 Troubleshooter Howard Ain shows us, you need to be careful before you rush into such a deal.
Cynthia Buchanan bought a house in Williamsburg on a land contract back in 2003. I first brought you her story last year and now there are new developments.
"We went to a lawyer. We used the same lawyer. We filed it through the recorder's office in Brown County and I thought everything was legit and legal," says Buchanan.
According to the land contract, even though Buchanan didn't take title to the property, she was required to pay the property taxes. In addition, she's responsible for all maintenance and repairs, so she re-did the floors, and put in new drywall and molding. Buchanan was in the process of re-doing the kitchen here, when she got notice that there was a problem with the mortgage and that's when she stopped making improvements to this house. Turns out the house was going in foreclosure because the owners stopped paying on the mortgage, even though Buchanan was paying those owners.
"They continued to pay the payments until apparently in 2009, and then a foreclosure notice was delivered that they had not been paying the payment," says Buchanan. The bank bought the house last month at a sheriff's sale and now Buchanan is preparing to leave.
"I got most of my stuff in storage, but I hope to get in touch with the bank. I hope they'll return my call because I really would like to stay here cause I have a lot of work in this place," says Buchanan.
"I didn't think it wasn't my house. That's where I made the mistake," says Buchanan.
So, I contacted JP Morgan Chase Bank and now they will speak with Buchanan about her possible purchase of the house.
So how can you protect yourself if you want to sign a land contract?
First, hire your own lawyer. Next, as Buchanan learned, you should not be making repairs and improvements to a house you don't own. It's important that you get the mortgage company to agree in writing to alert you to any default and to give you the right to make payments on the mortgage, so you can keep the property. Without all that you have no rights and as Buchanan found, you can be evicted and everything you paid would just be considered rent.