Resolving Disputes Over Installment Land Contracts


Installment Land Contracts are commonly known as “rent-to-own” agreements. Unlike an ordinary property sale using traditional financing, installment agreements call for a series of payments over a period of years to the seller. The installment payments include principle and interest bundled into one recurring payment. The payment arrangement is not a rental agreement. Legally, the agreement is a sale of real estate. But the seller is not obliged to transfer the deed until all payments are completed.


Investors or home buyers may find installment-payment agreements attractive if they have good cash flow but poor credit. The installment arrangement allows the buyer to bypass the traditional barriers to financing and avoid a large down payment. The seller also benefits by not only receiving compensation for the sale, but also the interest payments that are wrapped into the installment payments. If the buyer defaults, the seller can take back the property along with any improvements. 


Installment payment arrangements can help move properties into productive use. They are especially helpful when the seller was unable to sell through an MLS listing or a buyer cannot obtain financing.



However, there is great risk to both buyers and sellers in installment deals. Buyers often invest their labor and money into renovations during the installment period. If a default occurs, the improvements become effectively a gift to the seller. But the seller also carries risks such as destruction of the property. The risk these agreements carry often results in serious disputes.


Some common disputes and pitfalls between parties to installment sales include:


1. Whether the seller misled the buyer regarding the condition of the property.

2. Seller’s inability to deliver legal title after the payments are completed. One such case is where the seller declares bankruptcy.

3. Whether the buyer defaulted on the agreement.

4. Fraud or false representations concerning the payment amounts.


As a real estate attorney to property owners, I help resolve disputes involving installment land contracts. If you know a person struggling in an installment payment dispute, please forward our contact information:

Phone (484) 690-4613


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