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Real Property • Security Interests in Real Estate
PROP#200
Legal Definition
An installment contract is an agreement between a real estate seller and buyer, under which the buyer agrees to pay to the seller the purchase price plus interest in installments over a set period of time.
Plain English Explanation
An installment land contract is like buying a house on a payment plan, but instead of dealing with a bank for a mortgage, you make payments directly to the seller. The buyer agrees to pay the purchase price, plus interest, in regular installments over a set period of time.
The important part: the seller keeps the title (ownership of the property) until the buyer finishes paying off the contract. So, even though the buyer lives in the house and acts like they own it, the legal ownership stays with the seller until that final payment is made.
Think of it like buying a car on a long-term payment plan—except, instead of getting the title to the car right away, you only get it after making all the payments. If the buyer falls behind or can’t make the payments, they risk losing the property, sometimes without getting back the money they’ve already paid. This type of deal is usually used when the buyer can’t get a traditional mortgage, so it gives them a way to buy property without going through a bank.
The important part: the seller keeps the title (ownership of the property) until the buyer finishes paying off the contract. So, even though the buyer lives in the house and acts like they own it, the legal ownership stays with the seller until that final payment is made.
Think of it like buying a car on a long-term payment plan—except, instead of getting the title to the car right away, you only get it after making all the payments. If the buyer falls behind or can’t make the payments, they risk losing the property, sometimes without getting back the money they’ve already paid. This type of deal is usually used when the buyer can’t get a traditional mortgage, so it gives them a way to buy property without going through a bank.
Related Concepts
How do states treat a mortgage without a note?
How do states treat a note without a mortgage?
How is a mortgage's priority determined?
How may a party be a holder in due course of a note?
In lieu of foreclosure, what do many installment contracts prefer and how do courts address this alternative?
Under which theories may a mortgagee take possession of a property and begin receiving rents before foreclosure?
What are the 5 types of security interests in real estate?
What are the benefits of the holder in due course status?
What are the limitations of a junior interest?
What are the methods of transferring a note?
What interests does a foreclosure destroy?
What is a deficiency judgment?
What is a due on sales clause?
What is a foreclosure?
What is a receivership?
What is a redemption in equity?
What is a statutory redemption?
What is the distribution order of proceeds from a foreclosure?
What is the result of a grantee assuming the mortgage?
What liabilities are associated with a mortgaged property that is transferred to another party?
What occurs in intermediate theory states?
What occurs in lien theory states?
What occurs in title theory states?
What results from a party purchasing a foreclosed property subject to a senior interest?
What security interests exist under a absolute deed?
What security interests exist under a deed of trust?
What security interests exist under a installment land contract?
What security interests exist under a mortgage?
What security interests exist under a sale-leaseback?
Who may transfer their interest in a mortgage?
