April 2026

Sale of Mortgaged Real Property on Land Contract: Key Considerations for Lenders

Land contracts (contracts for deed) are a common method for buying and selling real property. They can be an effective financing tool that meets the needs of both the buyer and the seller. Effective ownership of the property is transferred to the vendee (buyer) upon execution of the contract, while the vendor (seller) retains legal title until the contract is paid in full.

What Is a Land Contract?

A land contract is a seller‑financed arrangement in which the buyer makes installment payments directly to the seller. The buyer receives equitable ownership and possession of the property, while the seller retains legal title until the contract is satisfied. Because equitable ownership transfers at execution, a land contract constitutes a conveyance of an interest in real property.

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