Land Contract/Dues

I am the president of our Association and have run into an interesting cop out. It seems that lot owners who are purchasinng their lot through land contract, and have yet to build a home, are stating that the contract owner is responsible for dues and not the contractee. The land contract clearly states that the person purchasing on contract is responsible for the dues, but they say they arent because it is not recorded. How do we collect that?

Further mud for the water....the contract holder is the developer who is still exempt from paying via the 20yo covenants, so they have no real motivation to collect or force their contractee to pay.

Thoughts?

If by 'land contract' they mean an 'option' to purchase the land at a later date for set terms, then the developer is still the owner of record and is responsible for taxes, dues, etc. If the developer is exempt from dues then no dues are owed.

'not recorded': Any instrument against the property should be recorded whether an option or actual purchase. Even if an option is recorded, the developer is still the owner of record and is the only 'member' of the HOA you can deal with. The holder of 'land contract' does not yet own the property in my understanding.

See: http://www.wisegeek.com/what-is-a-land-contract.htm

DISCLAIMER: This is not to be considered legal or professional advice. See terms below.

Brian,

I would think that whoever the owner of record is (who's name is on the title) would be resp for the assessments. From what I gather, a land contract is like an installment contract whereas you do not own the property until the last payment is made. Even if this land contract states the person buying the property is resp for paying the assessment I don't know if that could be enforced. I'm sure your CCRs state assessments are to be paid by the lot/unit owner. You may want to research Indiana property law for further clarification.

FYI, following is the def of a "land contract":

A land contract is a contract between the buyer and a private seller of a property, wherein the seller holds the title or deed to the property until all agreed upon payments have been made in full. Because the laws governing land contracts can vary by state, it is important that the governing laws be consulted to understand the particular rules that control a specific scenario. The property at issue within a land contract may be improved or unimproved, vacant, or a home or a commercial building. A down payment is usually made, and then equal monthly installments are paid until the property is paid for or until a balloon payment is required. A balloon payment is a lump sum of money that is due at a specified time, in this case at the end of the course of monthly payments.