Land contract
A seller-financing arrangement where the buyer takes possession and makes payments to the seller, but the seller keeps legal title until the loan is paid off. Common in Indiana and the Midwest.
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Part 1 of 4
Why a seller cares
A land contract lets you sell to a buyer who cannot get a bank loan, with you keeping the deed until they pay. It is common in Indiana, it needs a lawyer to write, and it works only if you are willing to be the lender for years.
Part 2 of 4
A simple example
You sell your $150,000 house on a land contract: $10,000 down, $1,100 a month at 7%, and a balloon in seven years. The deed stays in your name.
| What happens | What follows under a land contract |
|---|---|
| The buyer pays for seven years and refinances | You deed the home to them and collect the balance |
| The buyer stops paying in year three | State law says how you recover the home; it is not always quick |
| Your own mortgage has a due-on-sale clause | The contract can trigger it, which is a reason lawyers get involved |
A land contract makes you the bank, with the bank's risks and none of its staff.
Part 3 of 4
What people get wrong
That the seller keeping the deed makes it safe. The buyer builds an interest in the home over time, and recovering it after default is a legal process, not a lock change.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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