Re: land contracts
From: Janet Kelly (
Date: Wed, 14 Jan 2009 07:18:31 -0800 (PST)
Hi Richard,

yes, the legal advantage is that retaking the property is easier under a
land contract.  Since these agreements were all wanted by everyone on both
sides, I drafted the document to make it clear that if the buyer's house
doesn't sell and they can't ultimately close on their cohousing unit, they
just quitclaim the unit back to the development corporation.  we also made
it clear that if this happens the buyer will not be considered in default in
any way and there will be no credit repercussions.  There are some other
nuances, but these are the main things.

Under Wisconsin law the land contract seller retains legal title and the
buyer has equitable title during the land contract period.  This was
important to us because we wanted the people who moved into the community
under land contracts to be able to elect board members and have other rights
of owners.

you're right that it is much like a seller-financed mortgage.  the documents
are much simpler, and people in Wisconsin are familiar with land contracts,
so we went that way.

It is working well so far.  All buyers who hadn't sold their homes signed up
for the land contract program.  We started with 8, and 3 of them now have
contracts to sell their houses.  5 more to go -- including me.

Janet Kelly
Arboretum Cohousing
janetkelly28 [at]

On 1/13/09, Richard Pendleton <rmp011 [at]> wrote:
> Regarding Karen's post
> Thanks for the information from your development attorney regarding land
> contracts.  This sounds somewhat like a seller financed short-term mortgage
> with a balloon payment (but it is not a mortgage).  Is there some advantage
> (over a mortgage) to the development company and/or the buyer to this land
> contract approach however?  Is it that if the payment cannot be made, the
> develop co. doesn't have to foreclose?  Does the develop co. still own the
> unit during the 9 month period, even though buyers are living in it?
> ------------------------------
> Richard Pendleton
> Nubanusit Neighborhood & Farm
> rmp011 [at]
> 603-924-7491
> =============
> From: Karen Ecklund <ecklund.karen [at]>
> To: cohousing-l [at]
> Date: Wed, 24 Dec 2008 09:45:55 -0600
> Subject: Re: [C-L]_ land contracts
> From Karen Ecklund, Arboretum Cohousing, Madison, WI:
> I checked with our development attorney about how we put together our land
> contracts to assist with buying into our community during this challenging
> time.  Here is her response:
> Land Contracts at Arboretum Cohousing
> Land contracts (at least in Wisconsin) are a form of temporary seller
> financing. Basically under a land contract the buyer pays the seller a
> certain amount a month for a limited period of time. At the end of that
> time, the buyer must complete the purchase by paying the outstanding
> balance. Usually a buyer gets financing to do that, or the buyer could use
> the proceeds of a sale of another property (or a combination of both).
> At Arbco our development corporation has agreed to let buyers who have paid
> $10,000 in earnest money (and in many cases prepaid substantial amounts for
> unit upgrades) to buy on land contract for a period of up to 9 months. This
> period ends August 1, 2009. The intent is to allow financially committed
> people who have been with the group for some time but who have been unable
> to sell their houses to move into the community while trying to sell their
> houses. To make this arrangement financially possible for these buyers, we
> have offered the land contracts on terms that do not fully cover our
> carrying costs for these units. Specifically, the buyers pay only property
> taxes, utilities, and condo fees for 6 months, and then add 3% interest for
> the last 3 months. We are only able to do this because we had some extra
> room in the budget, and because the bank providing our construction
> financing agreed that this is a good idea in the current difficult real
> estate market. The alternative would be to "cut loose"
> these buyers and look for others to replace them - others without houses to
> sell.
> The land contracts require the Arbco buyer to close on their Arbco unit
> within 30 days after closing on the sale of their house. If the buyer has
> not been able to sell their house by August 1, 2009, the unit will revert
> back to Arbco ownership, and we would need to look for a replacement buyer
> at that point.
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Janet Kelly
255-7277(w); 280-9617(h); 333-8338(cell)

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