Also known as: installment land sale contracts · contract for deed · land contract
Written by attorneys · grounded in primary & secondary sources — see below
A security device for the sale of real property under which the vendor retains legal title until the purchaser completes installment payments of the purchase price. The purchaser receives equitable title and possession upon execution. Default may trigger forfeiture or foreclosure remedies depending on state law.
Ivan Ivanov orally agreed with Indigo Textiles to purchase a warehouse lot in monthly installments over five years. After Ivan paid the first three installments and took possession, Indigo Textiles refused to convey and claimed the deal was unenforceable. Ivan sued for specific performance but the court dismissed the claim because no signed writing existed.
Idina Iverson entered an installment land contract with Ironclad Industries and paid half the price before taking possession of a factory site. A prior unrecorded deed holder then appeared and asserted superior title. The court awarded the land to Idina but imposed a lien on the property securing the remaining balance she still owed.
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Ilana Isaacs signed an installment land contract with Iris Energy for a commercial parcel and paid one-third of the price before defaulting on later installments. Iris Energy sought to terminate the contract and retain all payments under a forfeiture clause. The court treated the arrangement as a mortgage and required foreclosure proceedings instead of automatic forfeiture.
Imani Idowu contracted to buy a retail building from Ironwood Capital under an installment land contract and paid forty percent of the price. A prior unrecorded claimant surfaced and demanded the property. The court quieted title in the prior claimant but granted Imani an equitable lien equal to the amount already paid.
Yes. The land contract provision of the Statute of Frauds requires a signed writing for any contract for the sale of an interest in land. An oral installment land contract is unenforceable absent an applicable exception such as part performance.
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The seller may pursue forfeiture in some jurisdictions or foreclosure in others. Many states treat the contract as a mortgage and require foreclosure proceedings rather than strict forfeiture of all payments made.
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Courts often balance the interests by awarding the land to the prior claimant while granting the installment purchaser an equitable lien for amounts already paid or by awarding the land to the purchaser subject to a lien for the unpaid balance.
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The buyer holds equitable title and the right to possession while the seller retains legal title as security for the unpaid balance.
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…(1938), as authority for its holding in Miles. To the extent Miles and Kravitz uphold the validity of forfeiture clauses in installment land sale contracts, they are overruled. The seller’s remedy for breach of the contract is to obtain a judicial sale of the property. The judgment of the trial court and the opinion of the Court of Appeals…