Contract for Deed Definition

(My Original Blog Post: http://ping.fm/lhriJ)

Minnesota Contract for Deeds

Much of this information can be used in other states, this article is specific to Minnesota.  What is a Contract for Deed in Minnesota?  A contract for deed is often called in other states an AFD (Agreement for Deed) or a Land Contract.  Each state handles a contract for deed differently, so I am only going to discuss Contract for Deeds in Minnesota for the purpose of this article.  You can get contract for deed forms from real estate agents, it's a standard form already pre-made by the association of realtors.   I will tell you that some people hire an attorney to draft a contract for deed, and that's not a bad idea either.   The reason I am writing this article today is that based on the economy today as it is, most everyone is finding it extremely difficult to get financing for a house, or very difficult at least without a substantial down payment.  Due to this continued difficulty, I find that both buyers and sellers need a solution to buy and sell homes, contract for deeds is one of those answers.  I will write an articles on rent to owns at a later time, but I do want to focus on contract for deeds in this article and what it means to you as the buyer of a contract for deed.

Contract for Deed definition: A contract for deed is a sales agreement between a buyer and seller of a property whereby the seller sells the house to a buyer, where the buyer is now the new owner with about all rights the owner had, with only about 1 exception, the buyer does not own the deed therefore can't really sell the property with clear title until they own the deed and pay off the seller's existing loan.  In other words, in order for the buyer to fulfill their obligations they would be paying the seller in full(the full balance) to eventually get the deed.  This typically happens at the time of a loan, or the buyer's refinance which often happens 2-3 years later.