Selling a home on a contract for deed

Contract for deed Benefits of selling a home

Contract for deed financing is faster and less costly transaction to execute than a traditional, purchase-money mortgage. A typical contract for deed, there are no origination fees, formal applications, or high closing and settlement costs. Another important feature of a land contract for deed is that seizure of the property in the event of a default is generally faster and less expensive than seizure in the case of a traditional mortgage. If the buyer defaults on payments in a typical MN contract for deed, the seller may cancel the contract, resume possession of the property, and keep previous installments paid by the buyer as liquidated damages. Under these circumstances, the seller can reclaim the property without a foreclosure sale or judicial action. MN law governing the contract-cancellation process is 60 days and the outcome may vary,depending on the contract terms and the facts of the specific case.


A typical contract for deed, the buyer becomes responsible for the obligations of a mortgagor in possession, such as maintaining the property and paying property taxes and casualty insurance. In addition, unless prohibited by the contract, either party may sell his or her interest in the contract.

Speed, simplicity of a contract for deed appeals to buyers

MN Homebuyers are attracted to a contract for deed purchase for several reasons. This method may be especially appealing to homebuyers who do not qualify for a  FHA or conventional mortgage -As people who work cash jobs and are therefore unable to prove their ability to make payments. Since the contract for deed process is significantly shorter than the mortgage-approval process, it may attract buyers who face time constraints or have limited options, such as people who are losing their homes to foreclosure.

First-time homebuyers who lack experience in the market or individuals who are wary of traditional financial organizations may also choose a contract for deed because of the relative simplicity of the buying process.

It is difficult to know exactly how prevalent contracts for deed are, because the nature of these arrangements allows the buyer and seller a degree of anonymity. Despite Minnesota law that require the buyers or sellers in all contracts for deeds to record the sale in the office of the county recorder or registrar of titles within a specified time period, the sales often go unrecorded due to a lack of financial and legal sophistication on the part of both parties involved in the agreement.


Percentage of Owner-Occupied Households with Contracts for Deed in the U.S.


Household Type

Percentage with Contracts for Deed,

by Year

2001 2003 2005
All owner-occupied 5.7 5.5 5.0
Non-black, non-Hispanic 5.3 5 4.4
Black 7.7 7.7 7.1
Hispanic 8.3 8.9 9.5
Below poverty line 3.8 3.0 3.9
Elderly (65 years or older) 1.9 2 2.1
Manufactured/mobile home 5.2 7.9 5

Source: American Housing Surveys 2001, 2003, 2005, U.S. Census Bureau.


Our Real Estate company specializes in contract for deed homes-seller financed-owner financing-rent to own-lease options.

If you are thinking of selling your property and offering financing email or call us we can help.

We work with contract for deed homes daily. The types of homes we work with are condo-town homes-single family real estate-Lake house-waterfront properties-cabins-lots-New construction-Waterfront-deeded access-view-river-hobby farm-acreage-acre-Farm

If you own a home a on land contract and havent recorded please go to the county your home is in and record the deed. Very important.

Executing the contract for deed.

  • The seller must set forth the terms of the contract in a purchase agreement. It is important that both parties fully understand the provisions of the contract, because once the purchase agreement has been signed, the options available to both the seller and buyer are limited.
  •                  The Contract for deed buyer should know whether he or she is responsible for property tax payments and insurance and whether the contract for deed includes a balloon payment. If it does include one, the buyer should be certain that he or she would be eligible for a mortgage to cover the payment when it comes due.
  •                   The contract for deed buyer should also make sure that the seller is the true owner of the house by checking with the county recorder’s office to see who is listed as the registered owner. If the seller still has a mortgage encumbering the property or is responsible for paying the taxes or insurance, the buyer should contact the seller’s mortgage company prior to signing the contract to determine whether the seller is current on his or her payments. Some “scam” sellers will retain a buyer’s payments and not apply them to the mortgage. If the seller defaults on the mortgage in this scenario and the home is foreclosed, the buyer will lose the house and all the paid installments.
  •                   The contract for deed buyer should ask the seller for a Truth in Sale of Housing report to determine the condition of the house. This report is required in Minneapolis and St. Paul and some other cities. In cities where it is not required, the seller should find his or her own inspector to assess the condition of the home.

In Minnesota once the land contract for deed is executed,the buyer should record the contract immediately with the county recorder’s office or the registrar of titles. While statutes requiring this registration are rarely enforced, recording the contract will help prove the buyer’s possession of the property and protect him or her from post-contract encumbrances placed on the property by the seller.

 Positive outcome for a land contract sale

It is important to note that despite their risks and sometimes negative associations, contract for deeds are not bad. When used wisely, they can be a good fit for some consumers. Contracts for deed offer a swift, streamlined option for people who do not qualify for traditional mortgages or would prefer not to deal with mortgage lenders. When administered by public agencies or nonprofit housing organizations, MN contracts for deed  homes can be a tool for building credit, promoting homeownership, and stabilizing neighborhoods.

To protect their interests in contracts for deed, sellers and buyers must do their homework, so to speak, by making sure they learn and understand what specific provisions and risks the contracts entail. Buyers in private contracts for deed should take additional steps. These include assessing the condition of the property, confirming that the seller has clear title, and recording the signed contract at the appropriate government office. By being informed and prepared, the buyer and seller in a contract for deed can help ensure a positive outcome for both parties.

Always use an Experienced Real Estate Broker who works with seller financing this will greatly help you when buying or selling a property.

For a free owner financing consultation

Email or call Steve Vennemann

BoardWalk Premier Realty INC