Also known as: land installment contract · installment land contract · contract for deed
Written by attorneys · grounded in primary & secondary sources — see below
A security device in which the seller retains legal title to real property until the buyer completes payment of the purchase price in installments. The buyer obtains equitable title and possession upon execution. Upon default the seller may pursue forfeiture in some jurisdictions or foreclosure under mortgage-like protections.
Lillian Locke entered an installment land contract to buy a commercial lot from a seller who had previously conveyed the same lot by unrecorded deed to Laura Lewis. After Lillian paid half the price and took possession, Laura surfaced and asserted title. The court awarded the lot to Lillian but imposed a lien in Laura's favor for the unpaid balance.
Lance Lee contracted with Lone Peak Energy to purchase industrial acreage under an installment land contract. The agreement required monthly payments over fifteen years and stated that legal title would remain with Lone Peak Energy until the final installment. Lance took immediate possession and began site improvements while making payments.
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Lorenzo Lugo signed an installment land contract for a warehouse and paid forty percent of the price before learning of an earlier unrecorded agreement between the seller and Layla Lane. When Layla recorded and claimed ownership, the court awarded title to Layla but granted Lorenzo an equitable lien measured by the amounts he had already paid.
A seller may pursue forfeiture in some jurisdictions or foreclosure under mortgage-like protections. State law governs the available remedies and some states impose foreclosure requirements to protect accumulated buyer equity.
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Courts may award the land to the installment purchaser while granting the prior claimant a lien for the unpaid balance or award title to the prior claimant while granting the purchaser a lien for payments made. The remedy balances the purchaser's equitable interest with the prior claimant's priority.
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Yes. The buyer acquires equitable title and possession upon execution of the contract even though legal title remains with the seller until full payment.
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…Appeals affirmed. We granted discretionary review to consider the validity of the forfeiture clause. We reverse. When a typical installment land contract is used as the means of financing the purchase of property, legal title to the property remains in the seller until the buyer has paid the entire contract price or some agreed-upon portion…