What is a land contract?

A land contract, also known as a contract for deed or installment sale agreement, is specifically a type of agreement where the seller provides financing directly to the buyer. Under this arrangement, the buyer takes possession of the property and makes regular payments to the seller over time. The seller retains legal title to the property until the buyer has fulfilled the payment obligations outlined in the contract. This arrangement is particularly beneficial for buyers who may not qualify for traditional financing or mortgages.

In this context, the other options do not accurately represent a land contract. A loan backed by real estate refers to a mortgage, where the lender provides funds and secures the loan with the property itself. A government loan program typically involves loans guaranteed or insured by a governmental entity, which is not the case in a land contract. A deed transferring ownership pertains to the formal legal documentation necessary for an ownership transfer, which does not occur until the contract terms are fulfilled in a land contract scenario.