Vendor--the owner who sold the property on land contract
Vendee--the purchaser who bought the property on land contract.
Default of 15 days in payment
After sending a 15 day forfeiture notice form, the vendor files suit in the district court asking the court to enter a judgment for the monthly payments which remain unpaid, together with any taxes or premiums for insurance that the vendor may have advanced. If the vendee fails to redeem the judgment within the specified time, the vendor may have the vendee evicted from the property. If less than 50% of the original principal balance has been paid, the procedure takes about 4 months from start to finish.
1. Usually faster and cheaper than foreclosure
2. Results in return of the property to land contract vendor
3. Vendor keeps all payments made to date
1. Vendee does not have to make payments which fall due after judgment in order to redeem
2. May require multiple lawsuits if vendee is chronically delinquent
FORECLOSURE
Default of 45 days in payment
Once the contract is 45 days delinquent, the vendor declares the entire remaining balance immediately due and payable, then files suit in the circuit court. The court enters a judgment of foreclosure for the entire balance and orders a public auction of the property. The vendee has 6 months from the date of sale in which to redeem or he may be evicted. The procedure takes a minimum of 12 months from filing suit to end of the redemption period.
1. Avoids multiple lawsuits for multiple defaults
2. Results in full payment of the entire balance of the contract
1. Longer and usually more expensive than forfeiture
2. Exposes the property to purchase by an unknown third party
Most vendors opt for land contract forfeiture for the first default, because of the time savings.
Some vendors opt for foreclosure for the second or third default, because of the certainty of resolving the matter once and for all.
Copyright 2005 by Steve Sowell