What happens when the seller defaults on mortgaged property that has been land contracted?

UPDATED: Oct 1, 2022

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What happens when the seller defaults on mortgaged property that has been land contracted?

I have been living in a home that I purchased on land contract for 4 years. I came home this week to a note on my door that the property was being foreclosed on. The court date is in about 3 weeks. The seller will not return my calls. What can I do?

Asked on March 21, 2019 under Real Estate Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Unfortunately, there isn't really anything you can do: the mortgage supercedes and takes priority over your contract so if the mortgage is not paid, the lender can foreclose. If they foreclose, that will terminate your contract. You can sue the seller for breaching the contract, but if they don't have money (which is possible if they weren't paying the mortgage), you won't recover anything. You can also try to negotiate with the lender to buy the property.

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