Contracts for Deed as a Selling Option

I will be on air with the Real Estate Radio Hour on Saturday, February 5, to talk about the use of contracts for deed as a selling option.  You can listen to the interview here.

Contracts for deed are an excellent mechanism for buying and selling real estate in the right circumstances.  To have a successful contract for deed transaction, you need a seller who is able to finance the sale and a buyer who can make the payments.  If there is a mortgage on the property, most often you also need a lender’s permission to sell the property via a contract for deed.

That permission is not, however, always forthcoming, and thus contracts for deed have not been able to play as much of a role in bringing the housing market back as they could have, as cautious sellers do not want to risk their lender calling their loan for a violation of their due-on-sale clause.  Nonetheless, with credit markets still tight (especially for real estate acquisition), a contract for deed is an ideal structure for the sale of an unencumbered property to a buyer who has income but cannot obtain financing.

In Minnesota, contracts for deed are made all the more simpler because of the existence of a uniform contract for deed form.  Still, consultation with an attorney before entering into the contract for deed is strongly recommended.