In contract law, a land contract, (also known as contract for deed or agreement for deed), is a contract between the buyer and seller of real property in which the seller provides the buyer financing in the purchase, and the buyer repays the resulting loan in installments. Under a land contract, the seller retains the legal title to the property but permits the buyer to take possession of it for most purposes other than that of legal ownership. The sale price is typically paid in periodic installments, often with a balloon payment at the end to make the timelength of payments shorter than in the corresponding fully amortized loan (a loan without a final balloon payment). When the full purchase price has been paid including any interest, the seller is obligated to convey (to the buyer) legal title to the property. An initial down payment from the buyer to the seller is usually also required.
The legal status of land contracts varies between jurisdictions.[vague]
Since a land contract specifies the sale of a specific item of real estate between a seller and buyer, a land contract can be considered a special type of real estate contract. In the usual more conventional real estate contracts, a seller does not provide a loan to the buyer; the contract either does not specify a loan or includes provisions for a loan from a different "third-party" lender, usually a financial institution in practice. When third party lenders are involved, typically a lien, as part of a mortgage or trust deed, is placed on the property, in which the property serves as collateral until the loan is repaid.