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Land contract
Land contract (a.k.a. contract for deed) is
a contract commonly used to convey equitable title of real property
to a purchaser, while the seller retains legal title to the real
property until a pre-determined agreement has been met (e.g. payment
of a certain percentage of the principal balance due).
Equitable title, for all intent and purposes,
makes the purchaser the "owner" of the property. There
are several "land contract friendly" states in the US
, while other states make it extremely difficult to sell or purchase
real property by means of a land contract.
Land contract verbiage comes in many shapes
and forms and will differ widely amongst various parties and/or
states. Sellers of a land contract are commonly referred to as "vendor"
, while purchasers are commonly referred to as "vendee's".
Although land contracts can be used for a variety
of reasons, it is commonly used as a means of short term seller
financing on real property. Usually, but not always, land contracts
will include balloon payments which force a purchaser to either
refinance the loan or pay a lump sum payment at a pre-determined
time or event.
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