Land purchase contract

Land contracts are detailed documents that contain information related to an agreement between two or more parties for the purchase and or sale of land. The buyer and seller agree on the relevant terms beforehand and the land contract has information such as the purchase price, contingencies, a closing date, and the earnest money deposit conditions. Usually, if the contingencies conditions aren’t met and the buyer doesn’t close then the seller has the right to keep the deposit. 

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Land purchase contract

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What are land purchase agreements

A land purchase agreement, also known simply as a land contract, is legal paperwork that outlines the terms of an agreement for buying land that the buyer and seller agreed to beforehand. It contains any additional conditions, all relevant contingencies, and timeframes for final closing. It’s similar to residential purchase agreements and commercial purchase agreements

Seller-held financing land contract

This type of contract is also known as an installment land contract, or an owner financed contract. In essence, the seller of the property serves as the mortgage holder and the buyer makes regular installment payments. The seller charges interest plus the principal and, just like a traditional bank, the seller can repossess the property if the buyer stops making payments before the loan has been paid in full. 

How land contracts work

Land contracts, similar to other types of real estate purchase agreements end with the transfer of the property to the name of the buyer. Before that can happen, the buyer and seller go through a process. Sometimes it’s short and other times it can be drawn out. Let’s look at how it works. 

An offer is made on the property

Before getting to the offer stage, it’s possible to negotiate with the seller about the terms and conditions each party is seeking. Conversely, a seller can create a land contract right away with their offer, and any terms they’re seeking. Use our land contract on this page to draft your offer. When drafting, keep in mind that this may be the final agreement so all the information needs to be correct and can be gotten from the seller then verified from the assessor’s office in your county. 


After the initial offer is made on the property, the negotiation process can start in earnest (if it wasn’t done beforehand). The seller will either accept, reject outright, or counter offer. Depending on the reaction of the seller, the terms and conditions can be smoothed out until everyone is ready to move to the next stage of the land purchase agreement process. After acceptance of both parties, an earnest money deposit is paid and a receipt is given to the buyer. 

Buyer performs due diligence 

Within the land contract, there are many contingencies and one of them includes the different types of surveys and tests the buyer will perform. This is to ensure that the land is suitable for the needs of the buyer. The allowed period in the agreement can vary widely but it’s usually between 30 - 180 days. Tests and conditions may include soil, environmental, and securing permits for the property. If everything outlined in the contingencies are acceptable to the buyer then the parties involved can move on to the closing stage. 


If, during the due diligence, a problem came up that was outlined in the contingencies, such as the buyer being unable to get permits for the property, then the contract can be rendered void and the earnest money deposit returned. If, on the other hand, everything checks out but the buyer doesn’t proceed with the closing then the earnest money deposit may be forfeit. 

Closing can proceed immediately if the buyer has the cash to pay upfront. If, on the other hand, financing is required then the lenders will usually require certain conditions to be met such as an appraisal by a third party. When the buyer has satisfied their requirements and secured funds, the closing can proceed as planned. This is usually done with a title company or an attorney. 

Registering the property

At the closing, the seller will sign over the deed and the buyer will transfer the funds to the seller. The title company and or the attorney presiding over the transaction will confirm that everything is in order. After the buyer receives the signed over deed and the new deed which will be issued, they can file it with the registry of deeds in the county of the property. 

When registering the deed, the buyer will need to pay a tax and this is usually split between the buyer and seller. 

Download our free Land purchase agreement (contract) in an instant to create a legally binding document.

Download our free Land purchase agreement (contract) in an instant to create a legally binding document.

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