Land contracts are common across Detroit because they let someone buy without a mortgage. They are also where buyers lose the most money. The rules that decide whether you keep the house or lose everything you have paid are specific, they are Michigan-specific, and most of them are not in the contract you are handed.
Under a land contract the seller keeps legal title until the balance is paid. You take equitable title — you get possession, and you take on the taxes, insurance and repairs — but the deed does not transfer at closing. It transfers when you finish paying, which may be years later.
That gap is where the risk lives. For the entire term, the person whose name is on the title is not you.
Buyers routinely assume the tax reset happens years later when the deed changes hands. It does not. If you sign a land contract this year, next year's bill is calculated on the uncapped value — roughly half the purchase price — and you are the one paying it.
Run the number before you sign: what your taxes become after uncapping. In Detroit, at 64.1844 mills, the increase is often larger than the payment difference that made the land contract attractive in the first place.
Michigan gives the seller two different routes, and which one they take changes everything for you.
| Forfeiture | Foreclosure | |
|---|---|---|
| Court | District court, summary proceeding | Circuit court, equitable action |
| Speed | Fast — weeks to a judgment | Slow — months |
| Redemption if you paid under 50% | 90 days | Set by the court |
| Redemption if you paid 50% or more | 6 months | Set by the court |
| What you must pay to redeem | The past-due amount plus taxed costs | Typically the full balance |
| Deficiency judgment against you | No | Possible |
Redemption periods under MCL 600.5744. The percentage is of the total purchase price paid, not of the time elapsed.
If the seller is still paying a lender and stops, the lender forecloses on their interest — and your equitable interest goes with it. You can be current on every payment you owe and still lose the house. Most mortgages also carry a due-on-sale clause that a land contract can trigger. Pull a title search and ask directly.
Michigan is a race-notice state. An unrecorded land contract can be defeated by someone who later buys or lends against the property without notice of your interest. Record it with the Register of Deeds — in Wayne County that is the county register — and keep the recorded copy.
You are usually responsible for taxes under the contract, but taxes owed from before you signed may still be outstanding. Michigan's tax foreclosure cycle runs three years to the loss of the property, and the county does not care whose name is on the contract. Check the tax status on the parcel before signing, not after.
Liens, judgments, an estate that was never probated, a co-owner who did not sign. A land contract closing often skips the title work a mortgage lender would have required, which is precisely why these problems survive to closing.
| Do this | Why |
|---|---|
| Order a title search | Confirms the seller owns it and shows liens, mortgages and judgments |
| Check the parcel's tax status | Arrears from before your purchase can still foreclose the property |
| Ask directly about an underlying mortgage | Their default becomes your loss |
| Record the contract | Protects your interest against later buyers and lenders |
| Confirm the uncapped tax figure | Your bill resets the year after signing, not at payoff |
| Check for blight tickets and code violations | They follow the property, and you take possession |
| Get title insurance if you can | Unusual on land contracts, and that is the problem |
| Have an attorney review the contract | Forfeiture terms, interest rate, balloon date, who pays taxes |
None of this means never sign one. For a buyer who cannot get conventional financing — self-employed, thin credit file, or a house no lender will finance because of its condition — a properly structured, recorded land contract on a property with clean title is a legitimate path to ownership. Detroit has a lot of houses that no bank will lend on, and land contracts are how many of them change hands.
The difference between a good one and a disaster is almost entirely the diligence above, and it is all doable before you sign.
Related: Detroit buyer programs — NEZ and the Land Bank · Detroit home prices by neighborhood · Detroit property taxes. Statutory references: MCL 211.27a (transfer of ownership and uncapping), MCL 600.5726 et seq. (land contract forfeiture), MCL 600.5744 (redemption periods).