What is a land contract?

A land contract is essentially a financial arrangement that allows a buyer to purchase property by making payments over time rather than paying the full purchase price upfront. In this scenario, the seller retains legal title to the property while the buyer obtains equitable interest; that is, the buyer can live in the property and may have the right to improve it, but the seller holds title until full payment is completed. This type of agreement can be particularly beneficial for buyers who may not qualify for traditional bank financing or who want to avoid dealing with the complexities of obtaining a mortgage.

The structure of a land contract is usually detailed, outlining the amount of the purchase price, the payment schedule, interest rates, and other conditions regarding the sale. Once the buyer fulfills the terms of the contract, ownership is transferred, solidifying the buyer's rights to the property.

Other options describe different types of agreements altogether. A legal document transferring property ownership refers to a deed, while an agreement to hire an agent to sell property involves a listing agreement. A lease agreement for renting property is distinctly separate from a land contract, focusing on temporary occupancy rather than ownership transfer.