What is a land contract?

A land contract is a legally binding agreement in which the seller provides financing to the buyer for the purchase of property. In this arrangement, the buyer typically makes small payments over time directly to the seller, rather than obtaining a loan from a traditional mortgage lender. The seller retains the title to the property until the full purchase price is paid, while the buyer receives equitable title and can take possession and use the property. This type of financing option is particularly useful for buyers who may not qualify for conventional financing or those looking for alternative methods of property acquisition.

Understanding this concept is crucial because land contracts can affect both the buyer's and seller's rights and obligations significantly. They often contain specific terms regarding payment schedules, property maintenance, and any applicable conditions that could lead to a breach of contract.