Contracts for Deed: Survey of State and Federal Laws, Benefits and Risks, Trends and Developments

This CLE webinar will provide real estate finance counsel with an overview of the recent developments and trends with contracts for deed as an alternative form of financing. The panel will review the state and federal laws regulating contracts for deed, examine the benefits and risks for buyers and sellers in these transactions, and provide drafting tips to ensure enforceability and mitigate risks.

Contracts for deed, also known as land contracts and land installment contracts, are one of the most common forms of alternative real estate financing for buyers who lack access to traditional mortgages. With a contract for deed, the buyer makes installment payments directly to the seller over a specified period instead of paying a mortgage to a third-party lender. The seller retains ownership of the property, and title to the property does not transfer to the buyer until all the payments have been made. 

At least 21 states have substantive laws regulating contracts for deed. These laws generally govern the key elements of a contract for deed transaction including recording requirements, default and cancellation terms, and foreclosure protections for buyers. On the federal level, in a 2024 advisory opinion, the Consumer Financial Protection Bureau indicated that contracts for deed generally meet the definition of "credit" found in the Truth in Lending Act and Regulation Z and therefore are subject to the multitude of requirements found in these regulations. 

Although contracts for deed can be an attractive option in certain situations, they carry significant risks for buyers and sellers. Counsel must be aware of the challenges related to these transactions and engage in proper disclosures and contract drafting to protect their client's interests as well as ensure that the transaction meets the requirements of state and federal laws.

Listen as our authoritative panel provides an overview of the state and federal laws governing contracts for deed and discusses the benefits and risks of these transactions for both buyers and sellers.