LEARN ABOUT: Buying or Selling a Home under a Land Installment Contract

By Rudman Winchell Attorney

By: Rudman Winchell Attorney Mikaela Wentworth

Despite falling home prices and low interest rates, consumers continue to struggle to obtain financing to purchase homes. As a result, land installment contracts (or contracts for deeds) are regaining popularity in Maine as a method of financing home purchases among people who may otherwise be ineligible for a traditional bank loan.

Under a traditional land installment contract, the buyer makes payments to the seller, which are applied to the purchase price of the home.  At the conclusion of the contract, the seller delivers a deed of the property to the buyer. Although this arrangement can be attractive for the reason discussed above, both parties, but buyers in particular, must enter these transactions with eyes wide open.

Land installment contracts typically provide that buyers must pay all real estate taxes on the property and assume responsibility for the maintenance and repair of the property. In the event that the buyers default on the contract, any payments made or expenses incurred by the buyers are typically treated as rent. In other words, buyers do not build any equity in the home under a traditional land installment contract until the contract is fulfilled and the deed is delivered.

Another potential concern for buyers is that their rights under the contract and subsequent deed from the seller are subject to any pre-existing mortgages or liens. For this reason, it is a good idea for buyers to research the title to the property prior to signing a land installment contract. This should reveal any prior encumbrances.

The Maine Revised Statutes list the minimum requirements for a land installment contract. See http://www.mainelegislature.org/legis/statutes/33/title33sec482.html.

In addition to these terms, the parties to a land installment contract will want to be sure that the contract is drafted to protect their unique interests.

If you are considering a land installment contract, one of Rudman Winchell’s real estate attorneys can assist you.

Please contact us at 207.947.5401 to make an appointment.


These materials have been prepared by Rudman Winchell for educational purposes only. They should not be considered legal advice. The transmission of this information to you is not intended to create a lawyer-client relationship. Readers should not act upon this information without seeking professional counsel. You should not send any confidential or private information to Rudman Winchell until a formal attorney-client relationship has been established, in writing.