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Mortgage Lending: § 206.45 Eligible properties.

(a) Title. A mortgage must be on real estate held in fee simple; or on a leasehold that is under a lease with a duration lasting until the later of: 99 years, if such lease is renewable; or the actuarial life expectancy of the mortgagor plus a number of years specified by the Commissioner, which shall not be more than 99 years. The mortgagee shall obtain a title insurance policy satisfactory to the Commissioner.

Mortgage Lending: § 206.125 Acquisition and sale of the property.

(a) Initial action by the mortgagee.

(1) The mortgagee shall notify the Commissioner within 60 days of the mortgage becoming due and payable when the conditions stated in the mortgage, as required by § 206.27(c)(1) have occurred or when the Deferral Period ends. The mortgagee shall notify the Commissioner within 30 days when one of the conditions stated in the mortgage, as required by § 206.27(c)(2), has occurred.

Mortgage Lending: § 206.131 Contract rights and obligations for mortgages on individual dwelling units in a condominium.

(a) Additional requirements. The requirements of this subpart shall be applicable to mortgages on individual dwelling units in a condominium, except as modified by this section.

(b) References. The term property as used in this subpart shall be construed to include the individual dwelling unit and the undivided interest in the common areas and facilities as may be designated.

Mortgage Lending: § 206.134 Partial release, addition or substitution of security.

(a) A mortgagee shall not release the security or any part thereof, while the mortgage is insured, without the prior consent of the Commissioner.

(b) A mortgagee may, with the prior consent of the Commissioner, accept an addition to, or substitution of, security for the purpose of removing the dwelling to a new lot or replacing the dwelling with a similar or like kind on the existing lot under the following conditions:

Mortgage Lending: Introduction to State-by-State Summary

The state statutes that govern land contracts (a.k.a. “land installment contracts” or “contracts for deed”) take a variety of approaches and forms. These laws were enacted at various times, and usually without much consideration of the laws on the books in other states. In large part they seem to have been created out of whole cloth, rather than drawing on the legislative language developed in other jurisdictions or lessons learned from those other attempts.

Mortgage Lending: ARIZONA

Arizona’s land contract statute includes several limitations on the forfeiture remedy. First, a forfeiture may be carried out only after waiting a specified amount of time, ranging from thirty days to nine months, depending on the amount of money that has been paid towards the purchase price.3 Second, the forfeiture remedy must be carried out in the manner set forth in the statute.

Mortgage Lending: CALIFORNIA

California’s statute uses the term “real property sales contract,” and defines that term as an agreement in which one party will convey title to another upon the satisfaction of certain conditions, and the contract does not require conveyance of title within one year of contract formation.12

Mortgage Lending: COLORADO

Colorado requires that the seller in a contract for deed transaction fulfill two key obligations: (a) designate the county public trustee (an official responsible for verifying the satisfaction of mortgages and also carrying out foreclosure sales) as the escrow agent for payments made towards the property taxes for the property,19 and (b), within ninety days after execution of the contract, notify the county treasurer and county assessor of the transfer by filing a written notice of transfer by contract for deed.

Mortgage Lending: FLORIDA

Florida’s statute simply and elegantly provides that all conveyances or instruments for the purpose of conveying property with a purpose of securing payment of money “shall be deemed and held mortgages” and “shall be subject to the same rules of foreclosure and to the same regulations, restrains and forms as are prescribed in relation to mortgages.”27 Courts have confirmed that this section applies to contracts for deed, which are deemed mortgages under Florida law.28 The statute further explains th

Mortgage Lending: ILLINOIS

In 2017, Illinois passed the Installment Sales Contract Act29 that expanded protections for buyers in land contracts.

Mortgage Lending: INDIANA

Indiana does not have a statute that comprehensively addresses land installment sales contracts; however, two acts, Indiana’s First Lien Mortgage Law and Home Loan Practices Act do have provisions that impose some rules on land installment sales contracts.

Mortgage Lending: IOWA

Iowa law provides three basic protections for land contract purchasers. First, Iowa law requires all land contract sellers to record the contracts within ninety days and, if the sellers do not do so, they may be subject to a $100/day fine and limited in their ability to obtain forfeiture. Sellers who fail to record cannot pursue a forfeiture until the contract is recorded.41 Second, Iowa’s statute requires that the seller deliver certain written disclosures to the buyer before execution of the land installment contract.

Mortgage Lending: LOUISIANA

Louisiana law imposes minimal requirements on land installment sales contracts, which it labels as bonds for deed. It requires sellers to provide buyers who default on payments with a notice giving the buyers forty-five days to cure the default.44 Buyers make their installment payments through an authorized escrow agent.

Mortgage Lending: MAINE

Maine requires foreclosure, rather than forfeiture, of any land contract for the sale of residential real estate if the buyer is in possession of the real estate at the relevant time.47 If the buyer is not in possession of the home (for example, if the buyer is renting the home to a tenant), the terms of the contract apply, meaning that a forfeiture could be allowed if the contract so provides.

Mortgage Lending: MARYLAND

Maryland law requires that land installment contracts be terminated through foreclosure rather than forfeiture.54 The buyer is entitled to notice and a right to cure the default prior to foreclosure.55

Mortgage Lending: MICHIGAN

Michigan law provides for a statutory forfeiture proceeding upon default under a land contract, or the seller may elect to carry out a foreclosure instead.64 The forfeiture proceeding allows for a redemption period in which the buyer may redeem by paying the arrearage;65 whereas in a foreclosure the buyer may only redeem by paying the full, accelerated loan balance.66 Therefore, some land contract sellers might elect to pursue a foreclosure, rather than

Mortgage Lending: MINNESOTA

Minnesota has two basic protections for land installment contract buyers. Under one provision, a “multiple seller” (someone who has arranged four or more contracts in the past twelve months) must provide a notice five days before execution of the contract that provides basic information about the contract.74 The notice includes a disclosure regarding which party pays property taxes, pays property insurance, and makes repairs. It also includes some basic language about the nature of land installment contracts and their complexity.

Mortgage Lending: MONTANA

Although there is no Montana substantive law directly regulating land contracts, according to a legal aid advocate in the state, many land installment transactions adopt aspects of the Montana Small Tract Financing statute, which allows a seller to transfer the deed to an escrow agent pending the terms of the agreement.77 The advocate we spoke to explained that a very high percentage of Montana real estate transactions happen through this “trust indenture” process, though in some ways these trust indentures are closer to mortgages.

Mortgage Lending: NEVADA

According to Nevada’s unfair and deceptive practices statute, it is a deceptive practice for the seller in a land installment contract to fail to disclose in writing to the buyer any encumbrance or other legal interest in the real property, any condition known to the seller that would affect the buyer’s use of the property, and the nature and extent of legal access to the real property.80 In addition, it is a deceptive practice for the seller to fail to record the contract within thirty days after accepting the first payment on the contract.

Mortgage Lending: NEW JERSEY

Advocates argue that New Jersey’s Fair Foreclosure Act applies to land contracts as it applies to any “mortgage, security interest or the like” secured by the debtor’s residence.82 The act provides two opportunities to cure a default: (1) prior to the initiation of a foreclosure proceeding, and (2) at any point prior to the entry of judgment.83 The statute does not explicitly state that a foreclosure must be filed if the Act applies, but there is a strong implication that foreclosure is the requ

Mortgage Lending: NORTH CAROLINA

Under North Carolina law a contract for deed must contain a number of disclosures, and a copy of the contract must be provided to the buyer at the time the contract is signed.

Mortgage Lending: NORTH DAKOTA

In North Dakota, a contract for deed may only be terminated after a required notice of right to cure is served on the buyer, unless the contract will be terminated through a judicial action at law or in equity.

Mortgage Lending: OHIO

Ohio law imposes minimal requirements on land installment contracts and protections for buyers in default.