What is a contract for deed?

A contract for deed is a legal arrangement where the buyer makes installment payments to the seller, gaining the right to occupy the property during the payment period. Once all payments are completed, the seller transfers the deed of the property to the buyer. This arrangement is particularly beneficial for buyers who may not qualify for traditional financing, allowing them to live in and use the property while they are paying for it. The agreement typically outlines the terms of payment, the responsibilities of both parties regarding maintenance and property taxes, and conditions under which the title will be transferred.

In contrast, the other options presented do not accurately describe a contract for deed. A lease typically involves renting without any intention for the renter to acquire ownership. An agreement focused solely on renting does not involve purchase terms or the eventual transfer of deed ownership. Finally, a formal agreement between lenders and the government pertains to financial borrowings and regulations, which is unrelated to the buyer-seller dynamic of a contract for deed.