Contract for Deed Template
Download REI Grove's contract for deed template to outline the buyer, seller, property, purchase price, payment terms, possession rules, tax and insurance responsibilities, default terms, and signature requirements.
Key Takeaways
- A contract for deed is a seller-financed real estate agreement where the seller keeps legal title until the buyer completes the required payments.
- Contracts for deed offer flexibility for buyers and sellers, but they also carry serious risks if payments or property responsibilities are unclear.
- REI Grove's template is organized around party details, property description, purchase price, payment terms, possession, taxes, and more information.
- By using this template, buyers and sellers can start organizing the main terms of a contract for deed before seeking legal review.
The process of buying or selling a home can be overwhelming. It's time-consuming, complex, and above all, expensive. For some would-be buyers, purchasing a home may be out of the question, especially if they don't have access to traditional financing methods. Luckily, there's an alternative for these buyers that cuts homebuying costs and moves a sale along quickly: a contract for deed.
This creative financing option can be beneficial both to buyers and sellers, but it's important to know the contract for deed meaning and the required steps of a contract for deed before you commit to signing one. In this article, we'll walk through what contracts for deed are and how they work. If a contract for deed is right for you, you can download a copy above.
Contract for Deed Template at a Glance
| Template Section | What It Covers | Why It Matters |
|---|---|---|
| Section 1: Parties & Property | Effective date, purchaser, seller, purchase price, county, state, and property description. | Identifies who is involved and what property is being sold. |
| Section 2: Payment Terms | Down payment, installment schedule, interest rate, late fee, and prepayment rights. | Defines how and when the buyer will pay the seller. |
| Section 3: Possession & Property Care | Possession date, repair obligations, property condition, and seller inspection rights. | Explains who can occupy the property and who must maintain it. |
| Section 4: Taxes & Insurance | Property taxes, assessments, fines, homeowners insurance, and insurance proceeds. | Clarifies who pays property-related obligations during the contract. |
| Section 5: Default | Notice of default, cure period, forfeiture, and damages. | Explains what may happen if the buyer fails to meet contract terms. |
| Section 6: General Terms | Entire agreement, amendments, governing law, assignment, and time-is-of-the-essence language. | Adds standard contract provisions that support enforceability. |
| Section 7: Signatures & Notary | Seller signature, purchaser signature, printed names, state/county, and notary acknowledgment. | Provides space for formal execution and notarization. |
What is a Contract for Deed?
So, what is a contract for deed?
Also known as a land contract, a contract for deed is an independent financing agreement that facilitates the transfer of land where the seller retains legal title until the buyer completes a series of payments.
By eliminating the need for a mortgage through a financial institution, payments from a buyer go directly to the seller for an agreed-upon time before the buyer is able to take ownership of the home. During the payment process, the seller reserves the right to the title to the home, then once the payments for the full purchase price are complete, the title is transferred to the buyer. During the intermediary period, the buyer is usually also responsible for paying for property taxes, repairs, insurance, and other expenses incurred as part of their monthly payments.
Because a contract for deed allows financing without the use of a lender or mortgage, you'll save money on closing costs and be able to record the deal much faster than a traditional home purchase. However, it also offers fewer protections for buyers and sellers if the deal goes awry or if the buyer stops paying their monthly amount. A lawyer can explain the aspects of a contract for deed for your specific situation.
When is a Contract for Deed Used?
This kind of financing is most commonly used when a buyer is unable to access traditional financing solutions. Usually, this means that their credit is too low to obtain a loan from a bank. By using a contract for deed, they're able to finance a home purchase without the need for a lender at all, and they're offered flexibility in the terms of the specifics of the contract, such as interest rates, down payment amount, and monthly payment amounts.
Contracts for deed are also commonly used between friends and family who trust that their loved one will pay consistently throughout the duration of the contract.
Who is Involved in a Contract for Deed?
A contract for deed includes a buyer and seller who will agree on and sign for specific contract terms. The buyer will agree to pay installments to cover the cost of the home, while the seller agrees to hold the title until the payments are complete. These roles should be explicitly and clearly listed in the contract to avoid ambiguity or confusion. Additionally, a notary may act as a witness for the contract to certify it before any payments begin, depending on state and local requirements.
What Does the Contract for Deed Template Cover?
REI Grove's contract for deed template is designed to help buyers and sellers outline the core terms of a seller-financed property transfer. The template includes sections for the parties, property, payment terms, possession, property care, taxes, insurance, default, general contract terms, signatures, and notary acknowledgment.
Section 1: Parties and Property
The first section identifies the purchaser, seller, effective date, purchase price, and property being transferred. This section also describes the property and states that the purchaser accepts the property in as-is condition unless otherwise agreed.
This section includes:
- Effective date
- Purchaser name and registered address
- Seller name and registered address
- As-is property condition language
Section 2: Payment Terms
The payment section explains how the purchaser will pay the seller. It includes space for the initial payment, payment method, number of monthly installments, installment amount, final payment date, interest rate, and monthly compounding.
This section includes:
- Initial payment
- Payment method
- Remaining purchase price
- Number of monthly installments
The template also includes language stating that the purchaser may prepay amounts due without penalty.
Section 3: Possession and Property Care
The possession section explains when the purchaser may take possession of the property and what condition the property must be kept in. In the template, the purchaser takes possession when the agreement is executed and may remain in peaceful enjoyment of the property as long as required payments are made on time.
This section includes:
- Possession after execution
- Timely payment requirement
- Property repair and maintenance responsibilities
- Return of property condition if the contract is terminated
- Seller inspection rights
Section 4: Taxes and Insurance
The taxes and insurance section explains who is responsible for taxes, assessments, fines, and homeowners insurance while amounts remain due under the contract. It also explains how insurance proceeds may be handled after damage to the property.
This section includes:
- Property taxes
- Assessments
- Fines
- Homeowners insurance
Section 5: Default
The default section explains what happens if the purchaser fails to perform required obligations under the agreement. The template includes a notice of default and a short cure period before the purchaser is considered in default.
This section includes:
- Failure to pay or perform required obligations
- Notice of default
- Cure period
- Forfeiture of payments
- Liquidated damages
- Other damages caused by purchaser acts or negligence
Because default rules can vary by state, buyers and sellers should have this section reviewed by an attorney before signing.
Section 6: General Terms
The general terms section includes standard legal provisions that affect how the agreement works. These provisions address the full agreement between the parties, unenforceable provisions, amendments, timing, governing law, and assignment.
This section includes:
- Entire agreement
- Unenforceable provisions
- Amendment requirements
- Time is of the essence
- Governing law
- Assignment restrictions
Section 7: Signatures and Notary
The signature section provides space for the seller and purchaser to sign and print their names. The template also includes a notary acknowledgment section with space for the state, county, names of the parties, date, notary signature, and commission expiration.
This section includes:
- Seller signature
- Seller name
- Purchaser signature
- Purchaser name
What is Included in a Contract for Deed?
There are many components of a contract for deed that must be agreed on by both parties before the document is signed. The first is the simplest: the purchase price. If you're in the process of signing for the sale of a home, a purchase price has probably already been set. You'll also need a set down payment amount to be paid upfront for the home before any other payments are decided.
Other aspects of a home purchase that would traditionally be handled by a lender now fall to both the buyer and seller to decide together, such as an interest rate, payment schedule, and total payment amount required for the seller to transfer the title for the property to the buyer.
Generally, a contract for deed is simply an agreement that a seller will hold the title for a home while a buyer pays them directly through monthly installments. The buyer will pay a specific amount for a specific number of months at a specific interest rate until their credit allows them to qualify for a loan or until the house is paid in full.
Keep in mind that a land contract offers less protection to sellers in the case that a buyer defaults on their payments — they could easily lose their previous payments and possession of the home if personal circumstances require them to stop paying on the property. You should always consult a lawyer about the terms of a contract for deed if you have questions or concerns.
How Long is a Contract for Deed Good For?
A contract for deed is different from a mortgage in many ways, but one specific way is through the length of the payment term. Typically, buyers are locked into 30-year mortgages; in contrast, a land contract can be as long as the buyer and seller want. A typical contract for deed is about five years long with a balloon final payment at the end.
What Happens After I Complete a Contract for Deed?
After a contract for deed agreement is signed and a notary certifies it, the buyer is free to move into the home and begin their payments as directed by the contract. Because this contract eliminates the need for a lender or mortgage, the closing process is much faster, and the buyer can move in much more quickly than they would be able to for a traditional home purchase.
Once the buyer completes the required payments and any interest, late charges, or other amounts due, the seller should transfer the deed according to the contract terms.
What if the Buyer Breaches the Contract for Deed Agreement?
If a buyer breaks the contract by defaulting on payments, they risk losing access to the property as well as all their previous payments on the home. Because the seller still holds the title to the property, it may be faster for a contract for deed agreement to be canceled and for the buyer to lose possession of the home if they breach their contract.
The buyer may alternatively be given a short amount of time to fix the issue before the seller pursues further action. Because default rights and procedures vary by state, buyers and sellers should speak with an attorney before signing or enforcing a contract for deed.
Why are Contracts for Deed Used?
The choice to use a contract for deed over a traditional mortgage may be made for several reasons. As mentioned above, contracts for deed involve an easier qualification process and more flexibility in the loan terms. The entire agreement and home buying process may take less time as a result.
Additionally, the buyer may have lower mortgage payments in this type of real estate transaction as well as fewer upfront costs like closing costs, such as origination fees, underwriting fees, attorney fees, and more. The deed contract and its remaining provisions can be more flexible and suited to the buyer and seller's individual circumstances.
How Can a Contract for Deed Template Benefit Buyers and Sellers?
A contract for deed template gives buyers and sellers a starting point for organizing the major terms of a seller-financed real estate transaction. Instead of drafting terms from scratch, the parties can use the template to identify the property, outline the payment schedule, assign responsibility for taxes and insurance, and clarify what happens if the agreement is completed or breached.
This can be especially useful for buyers exploring alternative financing, sellers considering owner financing, investors structuring creative financing deals, or family members documenting a private property transfer.
Conclusion
With this new knowledge, you'll be able to answer the question, "What is contract for deed?" and make an informed decision about entering into a contract of this kind. There are many reasons to use a land contract or contract for deed. You can download a Contract for Deed template through REI Grove above to take the first step in buying or selling a property without a third party.
REI Grove does not provide legal, tax, accounting, real estate, title, or financial advice. This template is for general educational purposes only. Contracts for deed are governed by state and local law, and requirements may vary significantly by jurisdiction. Consult a qualified attorney before using.
FAQs
What is a contract for deed?
A contract for deed is a seller-financed real estate agreement where the buyer makes payments directly to the seller and the seller typically keeps legal title until the buyer completes the required payments.
Is a contract for deed the same as a land contract?
Yes. A contract for deed is often also called a land contract, though terminology and legal treatment may vary by state.
Who signs a contract for deed?
The purchaser and seller sign the contract. The template also includes space for notary acknowledgment.
Who holds the title in a contract for deed?
In many contracts for deed, the seller keeps legal title until the buyer completes the required payments and other amounts due under the agreement.
When does the buyer receive the deed?
The buyer typically receives the deed after the purchase price, interest, late charges, and other required amounts are fully paid, depending on the contract terms.
Who pays taxes and insurance in a contract for deed?
The contract should clearly state whether the purchaser or seller is responsible for taxes, assessments, fines, and homeowners insurance while payments remain due.