The property doesn't need to be free and clear to sell via land contract.
First, if one takes a look at the MI state approved P&S, then one will see a clause stating that one is acquiring a property subject to the pre-existing financing.
Second, although a lender technically could exercise its "due on sale" clause on any note, I haven't run into any thus far that have called a performing note due. Right now, they're up to their eyeballs dealing with lots of non-performing loans. Calling another one due, that's currently performing, will transform a good asset into a bad one, and the FDIC/Fed is shutting down any banks with too many bad loans on the books.
Third, it's good to work with a real-estate attorney to create the note. Although I also invest in MI (the Detroit area), since you didn't mention which part of MI you'd like to sell your property, I'll recommend that you might want to network with some of the investors in your area to see how they're doing it.
Fourth, Wendy Patton (an investor and real-estate broker) is from MI, has sold plenty of properties with seller financing (land contract is a form of seller financing) in MI, and you can search google for more info on her.