A Guide to Contract for Deed

Discover everything you need to know about Contract for Deed agreements in this comprehensive guide. Learn about the benefits, risks, and essential elements of these agreements before entering into any real estate transactions.


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In the realm of real estate transactions, the journey to homeownership often takes various routes, each with its unique intricacies and considerations. Among these paths, the Contract for Deed stands out as a lesser-known yet powerful tool that can offer a viable alternative for both buyers and sellers. As traditional mortgage lending standards tighten and market conditions fluctuate, Contract for Deed agreements have gained renewed attention for their flexibility and accessibility. This guide aims to demystify the Contract for Deed process, empowering potential buyers and sellers with the knowledge needed to navigate this avenue confidently.

Whether you're a prospective homeowner looking for alternative financing options or a property owner seeking a non-traditional method of selling, understanding the fundamentals of Contract for Deed is crucial. From its basic principles to its advantages and potential pitfalls, this blog will serve as a comprehensive resource, shedding light on every aspect of this unique arrangement.

By the end of this journey, readers will gain a deeper understanding of Contract for Deed, enabling them to make informed decisions and navigate the path to homeownership or property sale with confidence and clarity. Whether you're a first-time homebuyer, a seasoned investor, or a homeowner exploring new avenues, this guide will equip you with the knowledge to unlock the potential of Contract for Deed in your real estate endeavours.

What is a Contract for Deed?

What is a Contract for Deed?

A Contract for Deed, also known as a land contract, instalment contract, or agreement for deed, is a legal agreement between a buyer and a seller for the purchase of real estate property. In this arrangement, instead of obtaining financing from a traditional lender such as a bank or mortgage company, the buyer makes payments directly to the seller over a specified period until the full purchase price is paid off.

Under a Contract for Deed, the seller retains legal title to the property until the buyer fulfils all terms of the contract, including payment of the purchase price. However, the buyer typically takes possession of the property and has equitable rights, such as the right to use and maintain the property, during the term of the contract.

Contract for deed vs. mortgage 

A Contract for Deed and a mortgage are two different methods of financing the purchase of real estate, each with its own set of characteristics, advantages, and drawbacks. Here's a comparison between the two:

Contract for deed vs. mortgage 
  1. Ownership and Title:

Contract for Deed: In a Contract for Deed, the seller retains legal ownership (title) of the property until the buyer completes all payments according to the terms of the contract. The buyer typically has equitable rights to use and possess the property during the term of the contract but does not have legal title until the contract is fully satisfied.

Mortgage: With a mortgage, the buyer obtains financing from a lender (e.g., bank or mortgage company) to purchase the property. Legal title is transferred to the buyer upon closing, and the lender places a lien on the property as security for the loan until it is fully repaid.

  1. Financing Structure:

Contract for Deed: Payments under a Contract for Deed are typically made directly to the seller over a specified period, often with interest. The purchase price may be paid in instalments, with a final balloon payment due at the end of the contract term.

Mortgage: In a mortgage, the buyer borrows funds from a lender to purchase the property and makes regular payments (principal and interest) to repay the loan over a fixed term, typically 15 to 30 years.

  1. Credit and Qualifications:

Contract for Deed: Contract for Deed arrangements may be more accessible to buyers who have difficulty qualifying for traditional mortgage financing due to credit issues, insufficient income, or other factors. Sellers may be more flexible in their qualification requirements.

Mortgage: Mortgage financing typically requires a higher level of creditworthiness and financial stability. Buyers need to meet the lender's criteria for income, credit score, debt-to-income ratio, and other factors.

  1. Legal and Financial Risks:

Contract for Deed: Both buyers and sellers face certain risks with Contract for Deed agreements. Buyers risk forfeiture of equity and potential eviction if they default on payments, while sellers risk non-payment and may need to pursue legal remedies to regain possession of the property.

Mortgage: With a mortgage, the lender holds the primary lien on the property until the loan is repaid. If the buyer defaults on the mortgage, the lender has the right to foreclose on the property and sell it to recover the outstanding loan balance.

  1. Flexibility and Control:

Contract for Deed: Contract for Deed agreements can offer flexibility in terms of negotiating the terms of the contract, such as the purchase price, payment schedule, and other provisions. Sellers may have more control over the transaction.

Mortgage: Mortgage financing may offer more standardized terms and conditions, with less flexibility for negotiation. Lenders typically have specific guidelines and requirements that borrowers must meet.

In summary, while both Contract for Deed and mortgage financing can facilitate the purchase of real estate, they differ in terms of ownership, financing structure, accessibility, risks, and flexibility. Buyers and sellers should carefully consider their individual circumstances and objectives when choosing between these two options. Consulting with real estate professionals and legal advisors is advisable to fully understand the implications of each financing method.

Contract for deed requirements

The specific requirements for a Contract for Deed can vary depending on the laws and regulations of the jurisdiction where the property is located, as well as the terms negotiated between the buyer and seller. However, there are several common elements and considerations typically involved in establishing a Contract for Deed:

Contract for deed requirements
  1. Legal Capacity: Both the buyer and seller must have the legal capacity to enter into a contract. This typically means they must be of legal age and mentally competent.
  2. Property Description: The contract should include a clear and detailed description of the property being sold, including its address, legal description, boundaries, and any relevant details about improvements or easements.
  3. Purchase Price: The contract should specify the agreed-upon purchase price for the property. This price may be paid in a lump sum or through installment payments over time.
  4. Payment Terms: The contract should outline the terms of payment, including the amount of any down payment, the frequency and amount of instalment payments, and any applicable interest rates or finance charges.
  5. Duration of Contract: The contract should specify the duration of the agreement, including the length of the payment period and any provisions for early repayment or extension.
  6. Responsibilities of Parties: The contract should define the responsibilities of both the buyer and seller, including obligations related to property maintenance, taxes, insurance, and any other relevant expenses.
  7. Title and Ownership: The contract should address the issue of legal title and ownership rights during the term of the agreement. Typically, the seller retains legal title until the contract is fully satisfied, but the buyer may have equitable rights to use and possess the property.
  8. Default and Remedies: The contract should include provisions outlining what happens in the event of default by either party, including remedies available to the non-defaulting party, such as termination of the contract, forfeiture of payments, or legal action.
  9. Disclosure Requirements: Depending on local laws and regulations, the contract may need to include certain disclosures, such as information about the condition of the property, any known defects, environmental hazards, or other material facts.
  10. Legal Formalities: The contract must comply with all applicable legal formalities, including requirements for writing, signatures, and notarization, as well as any specific requirements imposed by local laws or regulations.

It's essential for both parties to thoroughly review and understand the terms of the Contract for Deed before signing, and it's often advisable to seek legal advice from a qualified real estate attorney to ensure that the contract complies with applicable laws and adequately protects their interests.

Create, Edit, and Sign deed contracts with BoloForms

BoloForms Signature offers comprehensive tools to craft various types of contracts, including specialized documents like a contract for deeds. Once your contract is created within BoloForms Signature, it can undergo negotiation, and signature collection, all within the platform's functionalities.

1. Download Templates:

Download Templates

Log in to your BoloForms Signature account. Explore the available templates library or create your own template from scratch. If you're downloading templates from BoloForms Signature:

      • Navigate to the Templates section.
      • Browse through the available templates or use the search feature to find the deed contracts.
      • Once you find the desired template, click on it to select and download it to your device.

2. Edit Contracts:

    • After downloading the template, open it using BoloForms' editing tools.
    • Modify the text, add or remove clauses, and customize the contract to fit your specific needs.
    • Review the edited contract to ensure accuracy and completeness.

3. Sign Contracts:

Sign Contracts

Once the contract is edited and finalized, it's time to sign it. BoloForms may offer integrated electronic signature capabilities. If so:

      • Follow the platform's instructions to initiate the signing process.
      • Send the contract to the relevant parties for electronic signature.
      • Once all parties have signed electronically, the contract is considered legally binding.

Alternatively, you can print the contract and obtain physical signatures. After signing, you can scan and upload the signed document back into BoloForms for record-keeping.

4. Storage and Management:

Storage and Management

BoloForms likely provides features for storing and managing contracts securely. Ensure that you organize contracts appropriately within BoloForms for easy retrieval and reference.


Entering into a Contract for a Deed can be a viable option for both buyers and sellers seeking an alternative to traditional mortgage financing. This arrangement offers flexibility and accessibility, particularly for individuals with less-than-perfect credit or limited financial resources.

Throughout this guide, we've explored the key aspects of Contract for Deed agreements, including their definition, benefits, potential risks, and important considerations for both parties involved. By understanding the intricacies of this arrangement and working with reputable professionals, such as real estate agents, attorneys, and financial advisors, buyers and sellers can navigate the process with confidence.

Ultimately, the Contract for Deed presents an opportunity for individuals to achieve their real estate goals in a non-traditional way, opening doors to homeownership and investment opportunities that may have otherwise been out of reach. With careful planning and proper guidance, both buyers and sellers can leverage the benefits of this arrangement to fulfil their objectives and secure their financial future in the world of real estate.


Paresh Deshmukh

Co-Founder, BoloForms

23 May, 2024

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