What is a land sales contract in Oregon?

Understanding Land Sales Contracts in Oregon

Selling on Terms

If you’re considering buying land in Oregon, understanding the land sales contract process is essential. Land sales contracts are becoming increasingly common in Oregon, especially for buyers who are unable to secure bank financing. These contracts involve the seller carrying back a security interest on the property for a specified period of time.

There are two primary options for structuring land sales contracts in Oregon: a promissory note and trust deed, or a land sale contract. Each option has its own advantages and considerations, so it’s important to familiarize yourself with the differences before entering into a land sales contract.

Key Takeaways:

  • Land sales contracts are a common financing option in Oregon for buyers who can’t secure bank financing.
  • There are two options for structuring land sales contracts in Oregon: promissory note and trust deed, or a land sale contract.
  • A promissory note and trust deed involve the buyer signing a promissory note and trust deed for the remaining purchase price.
  • A land sale contract does not transfer legal title to the buyer at the time of closing.
  • It’s important to carefully consider the terms and remedies before entering into a land sales contract in Oregon.

Promissory Note and Trust Deed

Understanding Land Sales Contracts in Oregon Bridgetown Home Buyers

A promissory note and trust deed is a common option for land sales contracts in Oregon. With this option, the buyer signs a promissory note and trust deed for the remaining purchase price that the seller has agreed to carry back. The promissory note outlines the terms of repayment, including the interest rate, payment schedule, and any penalties for late payments.

The trust deed, on the other hand, serves as a security instrument that allows the seller to protect their interests in case of default. It outlines the seller’s remedies and rights in the event that the buyer fails to meet their obligations. These remedies may include the right to initiate foreclosure proceedings in order to take possession of the property and sell it to recover the remaining balance.

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One advantage of using a promissory note and trust deed is the seller’s ability to pursue non-judicial foreclosure. In Oregon, non-judicial foreclosure is the most common method used to enforce the security interest. It allows the seller to complete the foreclosure process without the need for a lawsuit, which can expedite the proceedings. Typically, the non-judicial foreclosure process takes around 130-150 days to complete.

It’s important to note that the specific terms and conditions of the promissory note and trust deed can vary depending on the agreement between the buyer and seller. Buyers should carefully review the terms and seek legal advice if necessary to ensure they fully understand their obligations and the consequences of default. Similarly, sellers should consider consulting with an attorney to draft a comprehensive and legally binding contract that protects their interests.

By utilizing a promissory note and trust deed in a land sales contract, both buyers and sellers can have a clear understanding of their rights and responsibilities. This option provides protection for both parties and offers a relatively efficient means of enforcing the agreement through non-judicial foreclosure. It is crucial for individuals in Oregon who are considering a land sales contract to carefully consider and negotiate the terms of the promissory note and trust deed to ensure a fair and successful transaction.

Land Sale Contract

Understanding Land Sales Contracts in Oregon Bridgetown Home Buyers

The other option for land sales contracts in Oregon is a land sale contract. Unlike a promissory note and trust deed, a land sale contract does not involve the transfer of legal title to the buyer at the time of closing. Instead, the seller retains legal title while the buyer holds equitable title. Once the contract is paid off, the seller conveys legal title to the buyer. This option gives the seller a wider range of remedies in case of default, including strict foreclosure, judicial foreclosure, and specific performance. One statutory remedy for the seller is forfeiture, which allows for non-judicial foreclosure.

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With a land sale contract, the buyer enters into an agreement with the seller to make payments over time, often with interest. However, throughout the life of the contract, the seller maintains full ownership and control of the property. This means that if the buyer defaults on the contract, the seller has more options for recourse compared to a promissory note and trust deed.

One of the seller’s remedies in a land sale contract is strict foreclosure. In this scenario, if the buyer fails to make the required payments, the seller has the right to terminate the contract and regain possession of the property. This remedy allows the seller to keep all payments that the buyer has already made, essentially forfeiting the buyer’s equity in the property.

Another remedy available to the seller in a land sale contract is judicial foreclosure. In this situation, the seller can file a lawsuit to foreclose on the property. If the court determines that the buyer has defaulted on the contract, it can order the sale of the property to satisfy the outstanding debt.

Additionally, the seller may seek specific performance as a remedy in a land sale contract. Specific performance is a legal order requiring the buyer to fulfill the terms of the contract, including making all required payments. If the buyer fails to comply, the seller may request a court order to enforce the contract.

It’s important for both buyers and sellers to understand the implications and potential remedies associated with a land sale contract in Oregon. The choice between a land sale contract and a promissory note and trust deed should be carefully considered based on the specific circumstances of the transaction.

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Conclusion

Land sales contracts in Oregon provide a viable financing option for individuals seeking to purchase land but are unable to secure traditional bank financing. It is important for both buyers and sellers to understand the differences between a promissory note and trust deed and a land sale contract before entering into an agreement.

Each option has its own advantages and considerations. With a promissory note and trust deed, the buyer signs a note and trust deed for the remaining purchase price. The seller has the advantage of pursuing non-judicial foreclosure in case of default, allowing for a quicker foreclosure process.

On the other hand, a land sale contract does not involve the transfer of legal title to the buyer at closing. The seller retains legal title while the buyer holds equitable title. This option provides the seller with a wider range of remedies in case of default, including strict foreclosure, judicial foreclosure, and specific performance.

Before entering into a land sales contract, it is crucial to carefully consider the terms and remedies associated with each option. By understanding the contract structure, buyers can confidently navigate the land buying process in Oregon and make informed decisions regarding their purchase.