The Purchaser of Real Estate under an Installment Contract

The purchaser of real estate under an installment contract is a type of buyer who opts for a payment scheme where the property is paid in installments instead of a lump sum. This type of sale is a popular option for those who may not have the financial capability to purchase the property outright, or for those who prefer to spread out their payments over a longer period. In this article, we`ll discuss what the purchaser under an installment contract should know.

The Basics of an Installment Contract

An installment contract, also known as a land contract, is a legal agreement between the buyer and the seller. It outlines the terms of the sale, including the price of the property, the schedule and amount of the payments, and the due date of the final payment. The seller retains legal ownership of the property until the buyer completes all the payments, and only then will the buyer receive the title or deed to the property.

The Benefits and Risks of Using an Installment Contract

For buyers, an installment contract offers several advantages. The most notable benefit is the flexibility of the payment schedule. Buyers can negotiate the amount and due date of the payments, which may be more manageable depending on their financial situation. Another advantage is that installment contracts don`t require a down payment, making the sale more accessible for buyers who don`t have enough cash on hand.

However, there are also risks associated with installment contracts. One of the most significant risks is the potential to lose the property if the buyer defaults on the payments. Unlike a mortgage, where the buyer can get a loan to pay the seller and avoid foreclosure, the seller can repossess the property in an installment contract. The buyer would lose any payments made towards the property and would have no claim on it.

What a Purchaser Should Consider

Before entering into an installment contract, it`s crucial for the buyer to do their due diligence. Here are some things that a purchaser should consider:

Ensure the contract is valid – The contract should be signed by both parties and notarized to be considered legal.

Verify the property ownership – The seller should have a clear title to the property, and it should be free from any liens or encumbrances.

Review the terms of the sale – The buyer should understand the terms of the sale, including the payment schedule, interest rate (if applicable), and any penalties for missed payments or early repayment.

Consider getting professional help – It`s advisable to consult with an attorney or a real estate agent experienced in installment contracts to review the contract and ensure it`s in the buyer`s best interest.


An installment contract can be an attractive option for those looking to purchase real estate without enough cash for a down payment or access to mortgage financing. However, it`s important to recognize that this type of sale also has risks involved, such as the potential to lose the property if the buyer defaults on the payments. If you`re considering an installment contract, it`s crucial to do your due diligence and seek professional help to ensure the contract is valid, the terms are fair, and the transaction is in your best interest.