Michigan - In a seller-finance vacant land deal from the buyer side - Need some advice

Hello all, I have followed Seth and the RETipster community for years, however I am currently in a seller-financed vacant land deal as the buyer and I need some help. I purchased an old Victorian farmhouse in Michigan in early 2022, traditional financing through a bank. The parcel is on 2.5 acres which was split off from a 10 acre parcel. Later that year, I entered a seller-financed deal to purchase the other 7.5 acres of vacant land, 24 month ballon, title held in escrow, paid a down payment, and have paid monthly interest-only payments every month since then.

The balloon payment is coming due soon and I have been seeking alternative financing and negotiating with the sellers to extend the contract out 3-6 months while I gain liquidity through the sale of two other assets. Unfortunately the sellers are refusing to extend the contract and the balloon is coming due sooner than I would like.

I’m wondering if any of you who have experience on the selling side of a vacant land transaction like this have an idea of what the timelines look like after a balloon payment date when the buyer has not satisfied the loan.

Have you ever performed a foreclosure or forfeiture on a seller-financed vacant land deal? Was the buyer afforded an amount of time to cure the debt and satisfy the payment, or was the property immediately reverted back to you without any judicial process?

My number one goal is to make the sellers whole and satisfy the contract, but I’m wondering if anyone has any input on timeframes? Does my equitable interest in the land disappear immediately after the balloon payment date, after being served with notice of default, or at a later date?

This land is very important to me and we have worked hard to maintain and preserve it. I know that I might have to accept some less than favorable terms to satisfy this obligation, but it is a part of our home and we are incredibly committed to preserving it.
Thank you very much for any help or experience you can share.

Hey @DanielC! I’m not an attorney. This isn’t level advice.

In my experience in Michigan, if you miss the balloon payment on your seller-financed land deal, you still have a right to the land even if the title isn’t in your name until you pay off the contract. If you don’t make the payment, you’ll be in default, and the seller must give you a notice of default, telling you what you owe and giving you time to fix it.

The seller might go for foreclosure, which involves going to court and can take months to over a year. Alternatively, they might choose forfeiture, which can be quicker—sometimes as fast as 30 days after notice—but this depends on your contract and state law.

I would read your contract carefully to understand the default and cure terms. Keep negotiating with the seller for an extension, and get legal help from a Michigan real estate lawyer with experience in seller financing and foreclosure. Look for all possible financing options, like personal loans or co-signers.

Your rights don’t vanish immediately after the missed payment, but you need to act fast and get legal advice.

Another creative idea: If you really are creditworthy, you could propose the idea of creating a new note, and then helping the seller/lender sell that note to another note investor… it could be a note investor you know, or even someone on Paperstac. The end result would be - the seller would get their cash, and you’d get an extension on your financing, for however long the new note’s terms are for.

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Seth, thank you so much for your help. I really appreciate you taking the time to offer some input. The contract has some language that addresses what happens after default, but it is not cut and dry. I am exploring all of these options. Thank you again

You could try scanning that whole document, copying and pasting the text into Claude, having it review the whole contract and asking it your specific questions.

I do this all the time with big, confusing documents and it’s pretty great at helping me see things I would never otherwise see on my own.

Here’s one example…