How am I (buyer) protected when purchasing land through seller financing?

[A.j. Silva]

I'm looking to purchase 1.9 acres in the greater Phoenix area. Seller-financing is the only option for me as my income is through my LLC which isn't older than two years. The seller is asking for $40,000 down which I am able to pay in cash. The total price the seller is asking is $195,000.

However, I've read that lands contracts can exist where I'm not given the deed to the home until the loan amount is paid in full ($155,000.) Is there a way to protect myself and recoup any of my equity  (downpayment and any construction I plan to do) if the property by chance forecloses? Even if I am deeded the title at closing, am I able to recoup any equity in cases of foreclosure? 

[Mitch Messer]

Hey @A.j. Silva, why do a land contract?

If I'm putting $40K down on a land deal, I'm getting the deed!

Also, if the property were to foreclose, it would be because you defaulted on your note! You presumably wouldn't allow that happen if you still had equity in the deal.

But, if you did lose the property to foreclosure, it would be auctioned off. Any "equity" held in the property would first go toward paying off your note balance (as you would expect).