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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.