What is the purpose of a land contract?

The purpose of a land contract is to enable purchasers to pay off property in specified amounts and intervals until the deed is delivered. In a land contract, the seller retains legal title to the property while the buyer makes periodic payments. This arrangement allows buyers who may not qualify for traditional financing to purchase property while gradually building equity. Once the buyer completes all payments as per the contract's terms, the seller conveys the legal title to the buyer, usually through a deed.

This mechanism is particularly beneficial in situations where buyers need time to secure financing or improve their creditworthiness. The seller effectively acts as the lender, receiving payments until the buyer fulfills the agreement. This flexibility in payment structure and terms is a key characteristic of land contracts, distinguishing it from other methods of property purchase.