Stronger Protections for Home Buyers Using Land Installment Contracts.
This Act introduces mandatory safeguards for individuals purchasing homes through land installment contracts, where the seller retains the title until the full price is paid. The main change requires sellers to record these contracts in real estate records, protecting buyers from claims by other creditors. Furthermore, in case of default, the seller cannot simply forfeit the property but must follow standard foreclosure procedures, ensuring greater protection for the buyer's invested equity.
Key points
Mandatory Contract Recording: Sellers must record the installment contract with the deed office within 5 days. This secures the buyer's interest against other claims on the property.
Penalties for Non-Compliance: If the seller fails to record the contract, the buyer gains the right to cancel the contract and receive a full refund of all payments made.
Equity Protection: In case of buyer default, the seller cannot use forfeiture or rescission remedies. They must liquidate the buyer's interest through the State's residential mortgage foreclosure process, protecting the buyer's invested capital.
State Implementation: States have two years to enact these protections. If they fail, the federal Consumer Financial Protection Bureau (CFPB) will adopt rules for that State.
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