What Is The Definition Of An Installment Agreement
Whenever a taxpayer can use losses to offset taxable profits or use deductions to offset their taxable income, this is an economic benefit to the taxpayer. Seller-take-over financing and installment financing may defer profit recognition to future taxation years if the taxpayer can expect significant tax losses or deductions, possibly for the contribution of a maintenance easement; or the taxpayer can expect a reduction in income, perhaps through retirement; or an older taxpayer wants to defer a lump sum payment for a period long enough to be taxable, if any, as part of their estate. The remittance agreement typically requires the buyer to provide insurance policies or provide funds to repair or rebuild improvements to the property after a fire or other accident. At common law, installment contracts offered an alternative to lending to third parties, freeing sellers from the complexities of traditional mortgage foreclosure. However, as courts and lawmakers have restricted sellers` expiration rights, the line between installment contracts and mortgages is being removed, and this simple alternative to traditional mortgage financing may no longer be that simple. Fair conversion gives the buyer of the contract a real estate interest from the date of signature of the contract. “The buyer under a real estate rate contract is the owner for property tax purposes.” Farmers State Bank v. Neese, 281 Ill App 3d 98, 102, 665 NE2d 534, 536, 216 Ill Dec 474, 476 (4 D 1996). During the term of the contract, the privileges may be tied to the buyer`s equitable property, and the buyer may assign its reasonable interests to a lending institution as collateral for a loan. See First Illinois National Bank v Hans, 143 Ill App 3d 1033, 1037, 493 NE2d 1171,1173, 98 Ill Dec 150, 152 (2nd D 1986). If no property tax is paid, the installment seller`s interests and the installment buyer`s interests threaten to be sold in a tax sale. As a result, both the seller and the buyer have an interest in having the tax invoices forwarded to the right party for timely payment, with the other proof of payment being presented.
A seller may also expire due to the terms of the instalment contract. Historically, a forfeiture clause allowed installment sellers to lose the contract without notice, take back ownership, and retain all money previously paid by the buyer of installments. Even if the buyer had a significant stake in the property, it could be lost even with the slightest breach of the installment contract. Recognizing the unfairness of forfeiture clauses, judges and legislators have adopted certain protections for buyers of payments. Below are legal and customary protections for remittance buyers based in Illinois, Indiana, and Wisconsin. Although the installment contract is a means of security, it lacks many of the formalities and buyer protection provisions contained in mortgage laws. Most installment contracts include an expiration clause that allows the seller to terminate the contract in the event of default by the buyer, repossess ownership of the property, and withhold all payments made by the buyer. Compared to mortgage enforcement, the seller can claim the property more quickly because they are not required to sell the property, respect termination and redemption rights, or take legal action. However, for a court to apply the confiscation of an instalment contract, the right of confiscation must be expressly provided for in the contract. Hettermann v Weingart, 120 Ill App 3d 683, 689, 458 NE2d 616, 620, 76 Ill Dec 216, 220 (2nd D 1983).
In addition, a seller must take care to include a time clause is essential when drafting the contract. In order to avoid a waiver of the clause, the seller must not accept late payments from the buyer.