Land Contract

Land Contract — Under a land contract, the buyer takes possession of the property and assumes responsibilities like taxes, insurance, and maintenance, but the seller holds the deed until the contract is paid in full or a specified milestone is reached. This structure is common in markets where buyers may not qualify for traditional bank financing, and it gives sellers an income stream secured by the property they still legally own.

Land contracts are actively traded on the secondary note market. Investors purchasing land contracts should pay close attention to state-specific laws governing forfeiture and cancellation rights, as the legal process for handling default on a land contract differs significantly from mortgage foreclosure in many jurisdictions. Some states allow relatively swift forfeiture proceedings, while others require a full judicial process, which directly impacts the investor's timeline and cost of resolution.