An agreement or contract to sell real property on an installment basis is often called a land contract or a contract for deed. This type of agreement allows a buyer to purchase a property by making regular payments over time, instead of obtaining traditional financing from a bank or other lender.
There are several advantages to using a land contract. For the buyer, it can be an easier way to purchase a property if they have a poor credit score or cannot obtain traditional financing. It can also provide more flexibility in terms of negotiating the purchase price, interest rate, and other terms of the agreement. For the seller, a land contract can provide a steady stream of income and potentially a higher selling price.
However, there are also potential risks and drawbacks to using a land contract. For the buyer, they may face higher interest rates and fees compared to traditional financing. They also risk losing their investment if they default on the contract, as the seller typically retains ownership of the property until the contract is fully paid off. For the seller, they risk default by the buyer, as well as potential legal disputes over the terms of the agreement.
Therefore, it is important for both parties to carefully consider all aspects of a land contract before entering into one. This includes reviewing and negotiating the terms of the agreement, conducting thorough due diligence on the property and the buyer, and consulting with an attorney or other professional to ensure that all legal requirements are met.
Overall, a land contract can be a useful tool for buying or selling real property on an installment basis. However, it is important to approach these agreements with caution and to fully understand the potential risks and benefits involved. With careful planning and negotiation, a land contract can be a successful and profitable option for both buyers and sellers.