What is a contract for deed or land installment contract?
By far the most common method of financing the purchase of real property is through a traditional promissory note secured by a mortgage. Some states, however, provide for an alternative financing method, most commonly used in transactions between private parties, called a contract for deed or land installment contract. At the risk of over simplifying, such a contract looks like a purchase agreement contract but effectively acts as a mortgage. In a traditional mortgage finance transaction, title to the property transfers to the buyer on sale. The buyer borrows the money to pay the seller in full, and then gives a mortgage back to the lender. With a contract for deed, however, title stays with the seller. The contract will provide for a purchase price and monthly payments, and provide that if the buyer completes making the specified payments, the owner will then provide the buyer with a deed to the property. Contracts for deed are often used for short-term financing (of a few years or le
By far the most common method of financing the purchase of real property is through a traditional promissory note secured by a mortgage. Some states, however, provide for an alternative financing method, most commonly used in transactions between private parties, called a contract for deed or land installment contract. At the risk of over simplifying, such a contract looks like a purchase agreement contract but effectively acts as a mortgage. In a traditional mortgage finance transaction, title to the property transfers to the buyer on sale. The buyer borrows the money to pay the seller in full, and then gives a mortgage back to the lender. With a contract for deed, however, title stays with the seller. The contract will provide for a purchase price and monthly payments, and provide that if the buyer completes making the specified payments, the owner will then provide the buyer with a deed to the property. Contracts for deed are often used for short-term financing (of a few years or le