A land contract is an agreement arranged between a seller and a buyer for the purchase of land or property. Typically, the seller dispenses the capital to finance the purchase of a property. The buyer has monthly installments and pays until the loan is paid off in full. This type of agreement is also known as Contract for Deed, Installment Land Contract, or Deed of Trust.

Features of a Land Contract

The following describe the characteristics of a land contract:

  • Payments are made in installments based on agreed schedules.
  • The seller retains the ownership of the property while the sum of the principal, including the interest rate is not yet fully paid.
  • The buyer typically occupies and uses the property even if he still owes the owner some amount of the purchase price.
  • Lump sum payments can be made to clear the remaining balance.
  • The seller issues the buyer the deed once the balance is paid off.
  • Once the balance is paid, the legal transfer of ownership occurs with a reconveyance.

Elements in a Land Contract Form

A written land contract is required for all purchase of real property. It serves as evidence of the agreement made between the two parties. Some of the most fundamental components found on the contract are the purchase price amount, interest rate and payment amount.

 

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