What counts as a land contract in Ohio
Ohio law defines it narrowly. R.C. 5313.01(A) says a land installment contract is “an executory agreement which by its terms is not required to be fully performed by one or more of the parties to the agreement within one year,” under which the seller (the vendor) agrees to convey title and the buyer (the vendee) agrees to pay in installments, “while the vendor retains title to the property as security.”
Three details matter:
- It covers homes, not bare land. “Property” in the chapter means real property improved by a dwelling.
- It must run more than a year. A short installment deal paid off within 12 months isn’t covered.
- Options aren’t land contracts. Ohio’s land contract law, R.C. 5313.01, treats a plain option to buy differently, though a lease with an option to purchase still triggers the disclosure form under R.C. 5302.30.
The 16 terms an Ohio land contract must include
R.C. 5313.02(A) requires the contract to be signed in duplicate, with a copy to each side, and to contain at least:
- full names and mailing addresses of all parties
- the date each party signed
- a legal description of the property
- the contract price
- any separate charges or fees for services
- the down payment
- the principal balance owed
- the amount and due date of each payment
- the interest rate and how it is computed
- a statement of any encumbrances, such as the seller’s mortgage
- the seller’s promise to deliver a general warranty deed at payoff, or another available deed
- a promise to provide evidence of title as customary in the area
- the buyer’s right to pay the seller’s mortgage and get credit if the seller defaults on it
- a promise that the seller will record the contract
- the buyer’s responsibility for taxes and assessments from the contract date, unless agreed otherwise
- a statement of any pending order of a public agency against the property, such as a code order
The contract must also be executed with the same formalities as a deed, and a metes-and-bounds description must be reviewed and approved by the county engineer.
Seller duties during the contract
The seller’s obligations don’t end at signing.
- Record it within 20 days. R.C. 5313.02(C) says the seller must record a copy with the county recorder and deliver a copy to the county auditor within 20 days of both signatures.
- Send balance statements. R.C. 5313.03 requires a statement of principal and interest credited and the balance due at least once a year, or on the buyer’s demand, but no more than twice a year. A land contract passbook satisfies it.
- Keep the mortgage in check. R.C. 5313.02(B) bars a seller mortgage larger than the contract balance, with a narrow exception, and bars new borrowing above the balance without the buyer’s consent.
- Deliver the deed at payoff. When the buyer finishes paying, the seller conveys title as promised.
If a seller fails to comply, R.C. 5313.04 lets the buyer enforce the chapter in municipal, county or common pleas court, and the court “shall grant appropriate relief.”
When the buyer stops paying
Ohio’s land contract law sets a fixed sequence before a seller can take the house back, and the last step depends on how much the buyer has paid.
Step 1, the 30-day cure period. Under R.C. 5313.05, forfeiture can be enforced only after 30 days from the default. If the buyer pays everything due plus any contract fees within those 30 days, forfeiture can’t be enforced.
Step 2, the 10-day notice. R.C. 5313.06 requires a written notice that identifies the contract and property, states the terms not met, and tells the buyer the contract will be forfeited unless they perform within 10 days of service and to leave the premises. It can be handed to the buyer, left at their home or the property, or sent by registered or certified mail.
Step 3, the court route. What comes next turns on R.C. 5313.07:
| Buyer’s payment history | Seller’s remedy |
|---|---|
| Less than 5 years and less than 20% of the price paid | Forfeiture and eviction action under Chapter 1923, R.C. 5313.08 |
| 5 years or more of payments, or 20% or more of the price paid | Foreclosure and judicial sale, R.C. 5313.07 |
In a foreclosure, the seller is entitled to sale proceeds only up to the unpaid balance. Anything above that belongs to the buyer. This is why land contract sellers who expect to “just take the house back” are often surprised.
Selling a house you’re carrying on a land contract
If you are the seller and want to cash out before the buyer finishes paying, you have three options: let the buyer refinance and pay you off, sell your seller’s interest and the payment stream to an investor, or cancel the contract by agreement with the buyer under R.C. 5301.331, as R.C. 5313.07 allows.
For the conveyance fee, R.C. 322.01(A)(2) has a land contract rule: when property under a land contract of record for at least 12 months is conveyed to a third party, the county transfer tax isn’t charged on the difference between the full price and the unpaid balance owed to the seller.
Before you sign one
Land contracts help buyers who can’t get a bank loan, but they carry real risk for both sides. Have an Ohio real estate attorney draft or review the contract, confirm your own lender allows it, and set up a system for collecting and recording payments. For a comparison with a note and mortgage, see seller financing in Ohio. If a buyer stops paying, our guide to the Ohio eviction process covers the Chapter 1923 case. And if you inherited a house still under a land contract, selling a house with title problems may apply.
