When it comes to buying a home, most people think of taking out a traditional mortgage. However, there is an alternative financing option known as a contract for deed (CFD). A CFD is a type of seller financing agreement where the seller acts as the lender and the buyer pays the seller directly over an agreed-upon time frame. In this article, we will provide an example of a contract for deed to help you understand how this type of financing works.
Here is an example of a contract for deed:
This Contract for Deed (the “Agreement”) is made and entered into on [date] between [Seller Name] (“Seller”), who owns the property located at [Property Address] (the “Property”), and [Buyer Name] (“Buyer”).
1. Purchase Price
The purchase price of the Property is [Purchase Price]. This amount will be paid in installments over [Number of Months] months at a monthly rate of [Monthly Payment].
2. Interest Rate
The interest rate for this contract for deed is [Interest Rate]. The interest will be charged on the unpaid balance of the purchase price until it is paid in full.
3. Payment Terms
The Buyer will make monthly payments to the Seller until the purchase price is paid in full. The monthly payments will be due on the [Due Date] of each month.
4. Late Payments
If the Buyer fails to make payments when they are due, a late fee of [Late Fee] will be charged. If the Buyer fails to make payments for [Number of Days] days, the Seller has the right to exercise their rights under the Agreement and terminate this contract.
The closing of this contract for deed will take place on [Closing Date] at [Closing Time].
6. Transfer of Title
Upon full payment of the purchase price, the Seller will transfer the title of the Property to the Buyer.
If the Buyer fails to make payments or comply with any other terms of this Agreement, the Seller has the right to declare a default. The Buyer will have [Number of Days] days to cure the default or the Seller may take legal action to terminate the contract and repossess the Property.
8. Governing Law
This Agreement will be governed by and construed in accordance with the laws of the state of [State], without regard to its conflicts of laws provisions.
9. Entire Agreement
This Agreement represents the entire understanding between the parties and supersedes any other agreement or understanding, whether written or oral.
In summary, a contract for deed is a financing arrangement where the seller acts as the lender and the buyer pays the seller directly over an agreed-upon period. This type of financing can be beneficial for buyers who may not qualify for traditional mortgages or who want to avoid the lengthy and complex process of obtaining one. However, it is important to fully understand the terms and conditions of a contract for deed before entering into one.