22/07: Assignment of Land Contracts - Releasing the Buyer's Responsibility

Question:

"My husband and I are in a land contract for a house that we've been in for 12 years. We asked the owners if we could "walk away" and they said we would have to find someone to take over the land contract. We did that and now they've changed their minds. Is there any way we could walk away from the house without having any legal recourse? Will they be able to sue us? The deed is not in our name, it is not registered, and the notaries are expired on the deed. We just want to give the house back without legal action against us. What are your suggestions?

Rochele"

Response:

You should be able to assign the land contract to someone else. Look to a case called Lemon v Nicolai, 33 Mich App 646, 190 NW2d 549 (1971) in which the Michigan court viewed restraints on the assignment of land contracts as restraints on alienation of property. Generally, both parties have the right to assign their interests in a land contract. If you wanted to assign your land contract, the seller may approve the creditworthiness of the new buyer and cannot withhold approval unreasonably. Therefore, you may assign your land contract. However, in order to protect yourselves, you will want to have the seller sign a consent to the assignment and a release. A release will protect you in the event that your assignee defaults in an obligation. If you do not procure a release, you are not released from your obligations on the contract. I strongly advise you to hire an attorney to help you negotiate the settlement.

Comments

Stephan68 wrote:

Thank you soo much! This tip is super useful!
20/11 10:35:19

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