land contract V.S. deed of trust

5 Replies

I am working on trying to buy a property using seller financing and stuck on which route I should go. The owner has it rented now and the tenants would like to sign another 2 yr lease if they could, so I would be buying into income. Owner is moving back to Africa and owns it free and clear.

Is a land contract or deed of trust better in your opinion when buying through seller financing? what are the pros and cons of both? What have been your experience with them both if any? 

Would love to hear @Bill G. and @Brian Gibbons suggestions as well as others. 


@Gary Alford  

Buying free and clear properties when you buy on terms are generally installment sales

A note and a security instrument like a deed of trust or a mortgage is customary

You want to do a thorough inspection because you will be responsible for all maintenance

Structure the note to make sure you can afford all costs

I generally open up an escrow account and place escrow instructions if I default on payments the owner can receive ownership of the property without a foreclosure after six days

One transfers ownership title, the other only equitable interest - which one do you think is better and why? :)

Get title.

Absolutely a Deed of Trust! Run from a Contract For Deed, there are questions as to the validity of pre-arranged deeds executed to avoid foreclosure laws. Same goes for any pre-arranged deed in lieu of foreclosure, always better to just follow the laws and do what is customary.....that being, now, a Note and Deed of Trust.

A CFD will also have insurance issues, assignments of losses must be made, can have double coverage, where the owner may need to act in the event of a loss. Same with getting building permits, a CFD may not be accepted, same with legal aspects that may require title.

There's no question, the seller is leaving the country, get the title! :)

Get a deed and have the seller carry back the loan with a promissory note secured by a deed or trust or mortgage.  Why would you leave a property in the seller's name?  There are few circumstances where a contract for deed arrangement makes sense IMO.  Get title to the property you will be insuring, repairing, paying taxes and paying a mortgage on.

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