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Land Sale Contracts - Explained

Sales and financing by Owner

Written by Jason Gordon

Updated at September 26th, 2021

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Table of Contents

What is a land sale contract?Discussion QuestionPractice QuestionAcademic Research

What is a land sale contract?

A land-sale contract is a situation where the owner of land sells it subject to the condition that the seller retains title to the land until the buyer pays the full purchase price. Basically, it is a seller-financing scenario, where the seller retains ownership of the land until it is fully paid off. The rights of the buyer during this period are determined by agreement between the buyer and seller. Generally, the buyer acts as if she is the owner during the payment period. She has the legal right to possess and use the land and is responsible for paying taxes and insurance. If the purchaser fails to make any scheduled payment, she defaults under the agreement and forfeits her right to purchase the property.

Note: Most states have laws protecting the purchaser in land-sale contracts. Basically, the purchaser does not forfeit her entire interest in the land in the event of a missed payment. Rather, the law recognizes an equitable interest in the land that accrues as the purchaser makes payments.

Next Article: What is a Security Interest in Personal Property? Back to: SECURED TRANSACTIONS

Related Topics

  • What are the common types of security interest in real property (land)?
  • What is a mortgage?
  • How does a security interest protect the mortgage holder?
  • Lis Pendens
  • Deficiency Judgment
  • What is a Deed of Trust or Security Deed?
  • What is a Land Sale Contract?

Discussion Question

How do you feel about these types of arrangements? Can you think of situations where this arrangement could be inequitable to the purchaser? Should the law provide additional protections for the purchaser? If so, what?

Practice Question

Geoffrey is considering selling his farm. Much of the farm consists of land that is suitable for hay or grazing livestock. After listing the property for several months, the only bid on the farm is from a buyer requesting the seller to finance the purchase. Geoffrey is uncomfortable with surrendering ownership of his farm until the purchase price is paid. What option might Geoffrey employ to alleviate his concerns?

Academic Research


land sale contracts

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