If you are considering purchasing a property, you might have heard of a contract for deed. This is a type of agreement where the seller of the property finances the sale and retains ownership until the buyer fulfills all the payment obligations. But who holds the title in a contract for deed?
In a contract for deed, the seller retains the title until the buyer completes the payments. This means that even though the buyer has possession of the property, they do not have legal ownership until they have paid off the full purchase price. The seller, on the other hand, has legal ownership of the property and has the right to sell it to another buyer, or take back possession of it if the buyer defaults on the payments.
It`s important to note that a contract for deed is not the same as a mortgage. In a traditional mortgage, the lender holds the title until the borrower fulfills the payment obligations. In a contract for deed, the seller acts as the lender and the buyer makes payments directly to them.
It`s also important to have a clear understanding of the terms and conditions of the contract for deed before signing it. The contract should specify the payment schedule, the interest rate, the consequences of default, and the conditions for transferring ownership to the buyer once the payments are complete.
In summary, the person who holds the title in a contract for deed is the seller until the buyer completes all the payment obligations. It`s important to thoroughly review the terms and conditions of the contract before entering into this type of agreement.