Contract for Deed
Creative FinanceA contract for deed — also called a land contract or executory contract — is a way to buy property on installments directly from the seller. The buyer takes possession and makes monthly payments, but the seller keeps legal title until the final payment is made. Only then does the deed transfer. The buyer holds equitable title in the meantime — the right to own it once the contract is fulfilled.
How it differs from a mortgage. With a normal mortgage, you get the deed at closing and the lender holds a lien. With a contract for deed, you don’t get the deed until the end — the seller keeps it as their security. That makes it simpler to set up (no bank), but it shifts the risk: in some states, missing payments can lead to forfeiture, where the buyer loses the property and the payments made, though many states now require a foreclosure-like process instead.
Because you don’t hold title until the end, record the contract (or a memorandum of it) to protect your equitable interest, and understand your state’s forfeiture-versus-foreclosure rules before signing. Use an attorney.
For the full breakdown, protections, and state nuances, see land contracts & contracts for deed.