Contract For Deed

What Is Contract For Deed And How Does It Work?

A contract for deed (also known as a land installment contract) is a legal agreement between two parties in which one party, the seller, agrees to transfer title to real estate to the buyer upon full payment of the purchase price. The buyer makes payments directly to the seller instead of to a bank or other lender and the seller holds onto the title until the buyer has paid off the entire purchase price.

Benefits And Drawbacks Of Using A Contract For Deed

A contract for deed is a legal agreement between two parties, usually a seller and a buyer, in which the seller agrees to provide the buyer with the title to the property after certain conditions have been met. This type of agreement can be beneficial for both parties, but there are also potential drawbacks that should be considered before entering into this type of arrangement.


  1. Flexibility: A contract for deed allows for a great deal of flexibility when it comes to terms and conditions. For example, the buyer can negotiate for a lower down payment or longer repayment period.
  2. Quick Closing: Since the buyer does not need to obtain financing from a bank, the entire process can be completed much faster than a traditional mortgage.
  3. Lower Cost: Since the seller is not paying interest on the loan, the cost of the transaction can be significantly lower than a traditional mortgage.


  1. Risk of Default: If the buyer fails to make payments, the seller has no legal recourse. The seller must wait until the buyer fulfills the terms of the agreement before they can take back possession of the property.
  2. Lack of Protection: Unlike a mortgage, a contract for deed does not provide the buyer with any protection from foreclosure. As such, if the buyer defaults on their payments, the seller can take back possession of the property without going through the foreclosure process.
  3. Long-Term Commitment: A contract for deed typically requires a long-term commitment from both parties. This means that the buyer will be obligated to make payments for the duration of the agreement, even if they decide to sell the property or move away.

In conclusion, a contract for deed can be a beneficial agreement for both parties, as long as all the potential risks and drawbacks are taken into consideration. It is important to understand the terms of the agreement and consult with a qualified attorney before entering into this type of arrangement.

How To Prepare And File A Contract For Deed: A Step-By-Step Tutorial

  1. Obtain a copy of the contract for deed form: You can usually find a contract for deed form online or at your local county clerk’s office.
  2. Fill out the contract for deed form: Complete the form by filling in the names of both parties involved in the transaction, the amount of money being exchanged, and the terms of the agreement. Be sure to include any additional information that is required, such as the date of the agreement.
  3. Have both parties sign the contract for deed form: Both parties should sign the form in the presence of a notary public or other witness.
  4. File the contract for deed form with the county recorder’s office: Once the form has been signed, it must be filed with the county recorder’s office. This will ensure that the agreement is legally binding.
  5. Follow the terms of the contract: After the contract has been filed, both parties must abide by the terms of the agreement. This includes making payments on time and fulfilling any other requirements outlined in the contract.