What is a 'Contract for Deed'?

A 'Contract for Deed' is a financing arrangement that allows a buyer to obtain possession of property while making installment payments to the seller. Under this type of contract, the seller retains legal title to the property until the buyer fulfills all obligations specified in the agreement, typically the complete payment of the sale price. This means that while the buyer has equitable title and can occupy and use the property, the seller remains the legal owner until the contract terms are satisfied.

This arrangement can be appealing for buyers who may not have immediate access to traditional financing or who want to avoid lengthy mortgage processes. It can also benefit sellers by providing a steady stream of income while retaining ownership until the sale is fully completed.

The other options do not accurately describe a 'Contract for Deed.' For example, a loan type with full title at signing implies that ownership transfers immediately, which contradicts the essence of a 'Contract for Deed.' A standard purchase agreement typically outlines the sale without the installment payment structure unique to a 'Contract for Deed.' Lastly, a temporary rental agreement distinctly relates to lease terms rather than ownership financing, further distinguishing it from the 'Contract for Deed' concept.