Land Contracts in Ohio

What Is a Land Contract?
A land contract, sometimes called an installment land contract or contract for deed, is an alternative way to buy a home without going through a traditional mortgage lender. Instead of borrowing from a bank, the buyer makes payments directly to the seller over time, and the seller retains legal title to the property until the buyer pays off the agreed amount. Only then does the seller transfer the deed.

Land contracts can be appealing for buyers who don't qualify for conventional financing, or for sellers who want to generate steady income from a property they already own outright. But because the buyer doesn't hold title during the contract term, these arrangements carry unique risks that both sides should understand before signing.

How Land Contracts Work in Ohio
• The buyer typically makes a down payment, then monthly installment payments to the seller

• The seller keeps legal title until the buyer satisfies the contract terms

• The buyer usually takes possession and is responsible for taxes, insurance, and maintenance during the contract period

• Ohio law requires certain land contracts to be recorded with the county recorder within 20 days of signing

• Once the buyer pays off the agreed balance, the seller executes and delivers a deed transferring ownership

Risks Buyers Should Watch For
Because the buyer doesn't hold title, missing payments can result in the seller terminating the contract, sometimes without the same legal protections a traditional foreclosure process would provide. Buyers should also confirm that the property doesn't have existing liens or an outstanding mortgage that could put their investment at risk if the seller defaults on their own obligations.

• Confirm the seller actually owns the property free and clear, or understand how any existing mortgage will be handled

• Get the contract recorded with the county to protect your interest

• Understand exactly what happens if a payment is missed

• Know how and when the deed will actually be transferred at the end of the contract

Why Title Work Still Matters
Because a land contract skips the traditional mortgage closing process, it's tempting to skip title work too. That's a mistake. A title search at the outset can reveal existing liens, unpaid taxes, or ownership disputes that could jeopardize the buyer's investment long before the final deed transfer. Involving a title company early, and again when it's time to record the final deed, helps protect both parties and ensures the transaction is documented properly from start to finish.

Considerations for Sellers Offering Owner Financing
Sellers benefit from land contracts too, but they carry their own set of responsibilities. A seller who still owes money on an existing mortgage needs to check whether their loan has a due-on-sale clause, which could allow the lender to demand full repayment if the property is sold via land contract without the lender's consent. Sellers should also keep meticulous records of payments received and maintain the property's insurance and tax status until the final transfer is complete.

Working with a title company and an attorney to draft the land contract terms clearly, covering default provisions, payoff timing, and how the deed will ultimately be delivered, helps prevent misunderstandings down the road for both the buyer and the seller.