Contract for Deed Examples
A Contract for Deed is also known as a land contract, land installment contract, or bond for deed. It allows a property owner (vendor or seller), to sell a property using seller financing to a buyer (vendee) who may not qualify for a traditional real estate loan from a third party lender, or does not have a large down payment, or who wants to close the deal more quickly, with lower closing costs. Or, the lender may not make loans for raw land.
Easy qualifying, affordable monthly payments, and low money down terms expand the number of potential buyers, especially when traditional lenders are using strict rules. The buyer and seller agree on the financing and payment terms. The usual financing is short-term, for a few years, until the buyer can qualify for traditional financing. Closing may be scheduled with a title company, real estate attorney or self-closing in person or by mail, with a notary used to verify identification and notarize documents.
The seller retains the legal title (the deed) to the property until the balance is paid in full. The buyer receives equitable title at closing, for the possession and use of the property. The buyer receives legal title once the final payment is made. If the buyer is paying in full at closing, the buyer receives the deed once the funds have cleared. Monthly payments may be made through an escrow company or loan servicer for a service fee.
There are many examples and variations of Contract for Deed legal forms and provisions. Laws vary by state and change over time. Some federal laws may apply. Some terms and provisions are required by law, other provisions are recommended by attorneys, or good practices, or chosen by the document preparer. Certain provisions may be used and preferred by some, while they are unused, unliked or modified by others.
The contract for deed terms and provisions may be grouped into different categories as shown below. Over 100 possible provisions in 28 categories are listed as a convenience for review when creating or using a contract for deed.
The buyer and seller should both consult with an experienced real estate attorney, familiar with real estate and contract for deed laws, terms, and wording. Some provisions might tend to favor the buyer or the seller. Act in good faith. Avoid any unlawful, unethical or predatory provisions or practices.
Several legal forms publishers sell Contract for Deed legal forms. A real estate attorney can provide legal advice and prepare a customized document, suitable for your particular location, property type, and situation.
1. Parties
Return to mailing address (if recorded)
Names of contract parties
Vesting as sole, joint tenants, TIC, LLC, trust
Signing parties addresses and phone numbers
Signing parties email
Buyer’s age
2. Property
Property legal description, address
Assessor’s Parcel Number (APN)
Property size, over 1.0 acre
Improvements included, if any
Appurtenances
Easements
Condition of improvements, boundary, delivered “AS IS”
Mineral rights included
Mineral rights not included
Personal property schedule attached
Bill of sale for personal property
Historic or archaeological structures or artifacts
Personal property, improvements, code violations left by Buyer
Seller right to deliver substitute property
Buyer right to exchange property
3. Payment
Purchase price
Consideration
Security agreement
Interest rate
Interest rate increase on default
Payment terms, amount, frequency, balloon
Monthly payment methods, ACH, no credit card
Buyer’s authorizes Seller to obtain credit report
Late fees
Bounced check, non-sufficient funds
Truth In Lending, finance charges
Prepayment allowed, no penalty
Prepayment discount
Seller’s right to pay or perform Buyer’s obligations
Promissory note attached
Credit card number, expiration date
Annual skip payment coupons
4. Escrow
Escrow agreement
Escrow agent fees
Escrow impound for taxes, assessments, insurance
5. Title
Title policy, abstract
Conveyance or mortgage by Seller
Assignment, conveyance or sale by Seller
Assignment, conveyance or sale by Buyer
6. Encumbrance
Existing liens disclosure
Default if Buyer causes lien against property
7. Taxes
Payment of taxes, assessments
W-9 or W-8BEN required
8. Insurance
Payment of insurance
Seller named as additional insured
Proof of insurance
Use of insurance claim proceeds
9. Fees
Recording fees
Document preparation fee
Closing expenses
10. Compliance
Mandatory provisions required by state or federal law
11. Disclosure
Mandatory disclosures required by law
Disclosure requirements
Disclosure status of roads, utilities
Seller must disclose any legal notices or actions against property
Buyer must disclose any legal notices or actions against property
Buyer must notify Seller of hazards, complaints, demands, liens affecting property
Property Report, Interstate Land Sales Act ILSA
12. Disclaimer
No Seller representations of current, future value
Seller provides county plot map, not re-survey
Disclaim accurate boundaries, suitability, utilities, percolation, access, directions, map data, mineral rights, association fees, local bond assessments
13. Due Diligence
Buyer due diligence
Buyer shall verify measurements, information, specifications
Buyer affidavit of inspection and suitability
14. Inspection
Buyer’s right of 30-day inspection, cancellation, refund
Seller’s right of inspection
15. Right of Entry
Seller’s right to maintain, repair, secure, protect property
Seller’s right to post sign or legal notice on property
16. Use, Possession
Possession of property
17. Use, Occupancy
No residency allowed until deed issued to Buyer
Personal use only, no leasing, agricultural or commercial use
18. Use, Tax Benefits
Buyer receives tax benefits of ownership
19. Use, Lawful
Comply with laws, ordinances, regulations, land use code
Buyer initials receipt of subdivision covenants
Comply with subdivision covenants, if any
No campfires, nuisance or waste activity by Buyer
20. Use, Improvements
Maintenance of property and improvements
Alterations, additions, improvements, permits
No excavation, drilling, construction allowed until deed issued to Buyer
Buyer must notify Seller before proposed work, contractors
No right to remove buildings, improvements, fixtures
21. Use, Vegetation
No right to plant, cut or harvest any trees, plants, crops
22. Default
Default by Buyer
Default by Buyer, initials
Default in taxes, insurance, assessments
Default by Seller
23. Acceleration
Acceleration of balance due
Reinstatement after acceleration
24. Forfeiture
Full forfeiture of payments
Partial forfeiture of payments
Buyer signs Cancellation, Release, settle outside of court
Buyer delivers Quitclaim deed on default
Estoppel Affidavit, Deed in Lieu from Buyer
25. Cancellation
Buyer right to cancel for 3 days
Buyer right to cancel and refund for 12 months
Buyer right to refund if septic permit denied
Parties may cancel by written termination agreement
Condemnation, eminent domain
26. Conveyance Deed
Deed type and delivery
27. Recording
Recording of contract allowed on request
Recording of contract by Buyer required
Recording of assignments required
Seller files notice of transfer w county treasurer
Seller files transfer declaration w county assessor
Recording of contract prohibited
Recording of contract or memorandum prohibited
Recording of affidavit of equitable interest prohibited
28. General (Boilerplate)
Entire agreement, latest version
Amendments, modifications
Counterparts, electronic signatures allowed
Time of the essence
Waivers
Surviving Provisions
Notice method and addresses
Buyer’s duty to defend any action against property
Joint and several liability
Seller indemnification
Heirs and assigns
Headings
Severability
Governing law, jurisdiction
Advice of Counsel
Force majeure, disaster
Mediation of disputes
No Admissions
Court costs and litigation expenses
Attorney fees
Singular, plural, pronouns, gender
Contract for Deed Comments
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