How Land Contracts Work in Michigan
Seller financing without a bank. Powerful when the paperwork is specific — and a years-long headache when it isn't.
Quick Answer
What is a land contract in Michigan?
A Michigan land contract is a seller-financed sale. The buyer takes possession and makes payments while the seller keeps legal title until the balance is paid, then delivers a deed. A solid contract states the price, down payment, interest, payment amount and due date, any balloon date, who pays property taxes and insurance, who handles repairs, and what happens on default. Most parties record a memorandum of land contract with the county Register of Deeds instead of the full contract, so the buyer's interest is public but the financial terms are not. Michigan requires a Property Transfer Affidavit with the local assessor after a transfer, and the transfer can uncap taxable value. If the buyer defaults, the seller's usual remedy is forfeiture, starting with a written notice (form DC 101).
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From handshake to deed
1. Agree on the actual numbers
Purchase price, down payment, interest rate, monthly payment, due date, late fees, and whether there's a balloon payment and when. Vague terms are where land contract disputes come from — not bad intentions.
2. Decide who pays taxes, insurance, and repairs
There is no default rule. Say it in writing, and say what proof is required each year. This single section prevents more fights than everything else combined.
3. Check the seller's mortgage
Most mortgages contain a due-on-sale clause letting the lender demand full payment when the property transfers. A seller with an existing loan should talk to the lender or an attorney before signing.
4. Get the legal description from the recorded deed
Not from the tax bill. The short description on a tax statement is not a legal description, and using it creates title problems that surface years later at a closing table.
5. Sign, notarize, and record a memorandum
Both parties sign and the signatures are notarized. Record a memorandum of land contract with the Register of Deeds in the county where the property sits — it puts the buyer's interest in the public record without publishing the price.
6. File the Property Transfer Affidavit
Michigan requires this form with the local assessor after a transfer of ownership. Expect the possibility that taxable value uncaps and the tax bill rises, unless an exemption applies.
7. Keep clean payment records
Both sides should track payments in writing. Whether a forfeiture or a payoff is what ends the contract, the payment history is the evidence that decides it.
8. Handle default the statutory way
If the buyer stops paying, the seller's usual remedy is forfeiture: a written Notice of Forfeiture (DC 101), a statutory cure period, and if necessary a district court complaint for possession (DC 103). Self-help — changing locks or shutting off utilities — is not allowed.
9. Deliver and record the deed at payoff
When the balance is paid, the seller delivers the deed, the buyer records it, and a discharge of the land contract clears the memorandum from the title.
Land contract vs. mortgage vs. rent-to-own
| Land contract | Bank mortgage | Rent-to-own | |
|---|---|---|---|
| Who holds title during payments | Seller | Buyer | Landlord |
| Who finances | The seller | A lender | The landlord |
| Buyer's interest recorded | Memorandum of land contract | Deed plus mortgage | Usually nothing recorded |
| Remedy on default | Forfeiture or foreclosure | Mortgage foreclosure | Eviction |
| Typical credit requirement | Set by the seller | Lender underwriting | Set by the landlord |
| Taxes may uncap | Yes, on transfer | Yes, on transfer | Not until purchase |
Government fees and deadlines are set by the State of Michigan and the courts and can change. We confirm current amounts when we review your matter.
Key Terms
- Land contract
- A seller-financed sale in which the buyer possesses the property and pays over time while the seller keeps legal title.
- Memorandum of land contract
- A short recordable document giving public notice that a land contract exists, without the financial terms.
- Forfeiture
- The seller's statutory remedy after a buyer's default, beginning with a written notice and a cure period.
- Balloon payment
- A lump sum of the remaining balance due on a set date.
- Uncapping
- The reset of taxable value after a transfer of ownership, which usually increases property taxes.
- Property Transfer Affidavit
- The Michigan form filed with the local assessor after a transfer.
People Also Ask
Need a land contract or a forfeiture notice prepared?
Tell us the property, the parties, and the terms you've agreed on. We'll verify the legal description, prepare the documents, and handle the recording steps.
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Reviewed and updated by the Clear Path document team. Informational only — not legal advice.