Land records · Parcel maps · October 5, 2026
What Is a Land Contract? Seller Financing Explained
What is a land contract? A seller-financed sale where the buyer pays in installments and gets the deed later. How it works, risks, and why to record it.
What is a land contract? It is a seller-financed purchase agreement in which the buyer takes possession and pays the price in installments, while the seller keeps legal title until the contract is paid off or reaches a set milestone. It is also called a contract for deed, installment land contract, or agreement for deed. When the buyer finishes paying, the seller delivers a deed. Land contracts can help buyers who cannot qualify for a bank loan, but they carry real risks on both sides. This page is general land-records background, not legal advice.
How it works
- Buyer and seller agree on price, down payment, interest rate, payment schedule, and term.
- The buyer moves in and usually takes on taxes, insurance, and maintenance.
- The seller keeps legal title; the buyer holds equitable title.
- Payments are made to the seller, sometimes with a balloon payment at the end.
- The seller signs a deed once the contract is satisfied.
Land contract vs mortgage
| Feature | Land contract | Mortgage |
|---|---|---|
| Who holds title during payments | Seller | Buyer |
| Lender | Seller | Bank or other lender |
| Default remedy | Forfeiture or foreclosure, depending on state | Foreclosure |
| Qualification | Flexible | Underwriting standards |
Risks for buyers
- Forfeiture: in some states, a default can end the contract and the seller keeps payments made.
- Seller problems: the seller’s own mortgage, liens, judgments, bankruptcy, or death can complicate getting title.
- Title defects not discovered at the start.
- Unrecorded contracts may not protect the buyer against later claims.
Risks for sellers
- Buyer default and the cost and time of regaining the property.
- Property damage or neglect.
- Due-on-sale clauses in the seller’s existing mortgage.
Protecting yourself
- Get a title search before signing. See how to find liens on a property.
- Record the contract or a memorandum with the county recorder. See how to record a deed.
- Use a written contract drafted or reviewed by an attorney.
- Use an escrow or servicing company to collect payments and hold a signed deed.
- Check state law, since many states regulate land contracts, including required disclosures and default procedures.
- Consider title insurance at the start and at transfer.
Taxes, insurance, and upkeep
Most land contracts shift the day-to-day costs of ownership to the buyer from the first month. The contract should say who pays property taxes, who carries homeowners insurance and is named on the policy, and who handles repairs. Buyers often pay taxes directly or into an escrow account, while the seller is listed as an additional insured because the seller still holds title. If the contract is silent, disputes are common, so spell these points out in writing.
Balloon payments
Many land contracts run only a few years and end with a balloon payment, a large lump sum due at the end. Buyers usually plan to refinance with a bank loan to make that payment. If credit, income, or the property’s value does not improve enough to qualify, the buyer can be at risk of default. Ask what happens if the balloon cannot be paid and whether extensions are possible.
Bottom line
A land contract is an installment sale where the seller finances the purchase and keeps legal title until the buyer pays. It can open doors for buyers but carries forfeiture and title risks. Search title first, record the contract, use escrow, and get legal advice. Find your county recorder via the Platbookmapper map.
What is a land contract FAQ
Who owns the property during a land contract?
The seller keeps legal title, while the buyer holds equitable title and possession.
Should a land contract be recorded?
Usually yes. Recording the contract or a memorandum helps protect the buyer against later claims.
What happens if a land contract buyer defaults?
Depending on state law and the contract, the seller may use forfeiture or foreclosure.
Is a land contract the same as rent-to-own?
No. In a land contract, the buyer is purchasing from the start; rent-to-own is a lease with an option to buy.
When does the buyer get the deed?
When the contract is paid off or reaches the milestone stated in the agreement.