Shorts
Regulation Z Protects Home Loans, Not Raw Land. Do This Math Before You Sign.
Regulation Z's seller financer provisions apply to credit secured by a dwelling, defined as a residential structure of one to four units. A vacant lot has no structure, so they generally do not reach a raw land sale. Run the test: down payment plus monthly payment times months. Interest gets the attention, the balloon ends deals.
Transcript
Nobody's coming to protect you on a land loan. So do this math. Federal Regulation Z protects home loans. A vacant lot has no structure, so those rules generally don't reach a raw land sale. The terms are on you. Here's the test. Down payment, plus monthly payment times the number of months. That's your total. Interest gets the attention, but the balloon is the one that ends deals. If that total doesn't add up, there's a balloon. Address on screen.
Sources
- 12 CFR 1026.36 - Regulation Z seller financer exclusions (a)(4) and (a)(5) and the scope paragraph
- 12 CFR 1026.2(a)(19) - the definition of "dwelling" as a residential structure containing one to four units
- Fair owner financing terms on land - YAI LLC (the total-cost test and why the balloon is the term that ends deals)
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