Installment Land Contract

By Susan Lassiter-Lyons | Real Estate

Here's another free form courtesy of The Investor Insights!

So, what exactly is an installment land contract? Installment land contracts or contracts for deed are a security agreement between a seller and a buyer. It's a great way to seller finance your deals. Here's how it works:

1.The Seller agrees to sell a property by financing the purchase for the Buyer.
2 The Seller retains legal title and the Buyer receives equitable title.
3 The owner-carried financing can include an existing mortgage balance or the property can be free and clear.
4 Upon payment in full, the Seller hands the Buyer a deed to the property.

Voila! Another successful owner-financed transaction! Here's the form for you to print out, email or save to your computer. Click here to get your FREE installment land contract.

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(6) comments

Toby Beavers

james – thanks for your input.

Your site has some problems:I clicked onto Learn More
“How We Help With Foreclosures” on your home page and get this link:

Then IE will not allow me back on your site….Very starnge


Antoine – not true with what your CPA stated. The tax benefit can be preserved under agreement until title is fully transferred which is after fulfillment of the last payment…this is America and people are free to agree.


Installment land contracts are great when used properly. On my last deal I bought a property using an installment land contract. I was planning to rent the property out but someone made me an offer for a lot more than what I paid for it. This was 1 1/2 months after I got the property. Now, the buyer was using FHA financing but because it was an installment land contract and the owner retains legal title, I drafted the purchase contract between the owner and my end buyer. On the HUD-1, I became just an additonal payee on the seller side. Doing it this way, I did not encounter any title seasoning issue and closing went through with out a hitch.

I used installment land contract in this deal not to get tax benefits but because I needed to ficilitate a fast sale for the owner who was moving to another state and does not want to be saddled with double payments, a rent payment and a mortgage payment. And he did want to be an out state landlord. I think one just needs to know when to use this strategy and when it is used properly it works great.

Lastly, I just want to say Susan keep up the great work. Your site is one of the handful sites that I enjoy going back to again and again.


I have done a land contract before, and my CPA assured me I was lucky for two reasons:
1. for tax purposes, equitable title means nothing, and only the title holder can use all the tax advantages of the sale ( amortization adn depreciation)
2. if you do a landcontract, make sure you stay on the insurance as that is the way lenders find out the property “chnaged hands”, and they will call the loan
Lastly, the IRS may call you on a 1031 exchnage not done and cost recovery taxes are due immediately if not reinvested within 180 days.

Jeffrey Smith

Check your state laws with a good real estate attorney, because the legal interpretation of the Installment Land Contract (ILC) varies widely.

Upon default, in some states the “buyer” can be evicted just like an ordinary tenant. In other states, the “buyer” has the right to due process for a judicial foreclosure, which can take months while the deadbeat stays in the property making no payments.


This installment contract is insufficient and prone to create lawsuits, has no protective disclosures and does not provide for tax benefits. Cookie cutter if ever there was one. I suggest offering it as the starting framework and then mention a caveat just so some person does not try to use it as this would blow up like high explosive.

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