land contract

Definition

A seller-financed agreement where the buyer makes payments directly to the seller but doesn't receive the deed until paid in full. It's layaway for houses, with all the same risks.

Example Usage

Unable to qualify for a mortgage, they purchased the farmhouse through a land contract with 10% down and monthly payments to the owner.

Origin

Alternative financing method that predates modern mortgage banking, formalized in 19th century

Fun Fact

Land contracts are popular in economically distressed areas where traditional financing is scarce, though consumer protections vary wildly by state.

Source: Alternative financing and real estate contracts terminology

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