“Bond for Title” is a type of real estate term referring to a type of real estate financing method for the sale and purchase of a home.  In a bond for title arrangement, the seller legally retains the title while the buyer makes periodic payments in installments.  The seller will then only transfer the title when the buyer has satisfied the payment amounts. 

During the contract term, the buyer is called an “equitable” owner of the property.  This means that they can claim the various benefits of owning a home (such as certain tax benefits).  However, cannot legally claim possession of the title until the contract terms are fulfilled. 

Bonds for title are sometimes called by other terms, including “contract for deed” or a “bond for deed”. 

Why Should I Use a Bond for Title?

For the buyer, a bond for title can be very beneficial.  For instance, it can allow the buyer to use the contract period in order to secure a secure a more conventional long-term loan.  This may allow them to use the property before they have secured a mortgage loan or other type of financing.

For the seller, a bond for title arrangement can help them complete the real estate transaction in a much quicker time than more conventional routes.  For instance, the seller might not have to wait for the buyer to qualify for a mortgage; instead the buyer can begin issuing payments according to the terms in the bond contract.

What are Some Risks Associated With a Bond for Title?

On the other hand, bonds for title can also be risky.  For the seller, there is always the risk that the buyer might default on the payments.  While the seller retains the deed to the land, they might have been able to secure a better deal during the contract period. 

For the buyer, there is sometimes a risk that the seller would refuse to transfer the deed upon completion of the payments.  This can give rise to a lawsuit, and can cause strain between the two parties.  Also, there is also the risk that the seller might violate their obligations as a property owner, such as the duty to disclose any highly dangerous risks associated with the property.

What if I Have a Dispute Over a Bond for Title?

Disputes over bonds for title are generally handled like any other contract agreement.  The parties may need to file for a lawsuit to determine whether either party violated a term of the agreement.  In the event of a breach, the non-breaching party may be entitled to a damages award for losses.  This may require an in-depth analysis of the documents, as well as an examination of other items of evidence.

Do I Need a Lawyer if I Need Assistance With a Bond for Title?

Bonds for title generally require the guidance and assistance of lawyer, especially during the negotiation phases.  Hiring a real estate lawyer can help ensure that your interests are being represented to the fullest, and that your agreement isn’t one-sided or in violation of the law.  Your attorney can also provide you with reliable legal representation in the event that you need to file a lawsuit over a dispute.