A land installment contract is a specific type of land contract where the seller agrees to provide financing for the buyer party. Here, the seller offers a purchase price, and the buyer agrees to repay the loan in agreed-upon installments. This type of arrangement may be beneficial for both parties for various reasons. For instance, this can be helpful for a buyer who is looking to secure financing on short notice. Also, for the seller, it can provide some security that the payments will be made consistently
Often times, a balloon payment may be issued towards the end of payments, similar to balloon payments in standard mortgage contracts. This helps to shorten the overall time that the payments are being made. A land installment agreement may also called by other names, such as contract for deed, a land contract, installment sale agreement, or agreement for deed.
Unlike in other types of real estate sales, the title in a land installment agreement does not transfer immediately to the buyer. Instead, the seller retains the title to the land or property. On the other hand, the buyer is allowed to assume physical possession of it (usually to live there, or to use the property for various purposes). The buyer can obtain legal title to the property once the full purchase price has been finally paid off (along with interest).
Like any other real estate agreement, a land installment agreement may be associated with various legal issues, include:
- Breach of contract by either party
- Real estate fraud issues (such as misrepresentation during negotiations)
- Failure to record the agreement in writing (real estate contracts generally need to be in writing
- Issues with licensing or certification
- Failure to keep up with payments
- Failure to deliver title after payments are completed
Remedies for violations can include a number of different remedies. In most cases, a monetary damages award may suffice. In other situations, the court may issue an equitable remedy instead of damages (such as re-writing the contract).
Land installment agreements are fairly complex real estate transactions. You may need to hire a real estate attorney if you need help with a land installment agreement. Your attorney can help when it comes to drafting or reviewing the contract, and can assist during negotiations. Also, if you need to file a lawsuit over a dispute, your lawyer can represent you in court.