Contract for Deed (Land Contract)

CONTRACT FOR DEED (LAND CONTRACT)

(State of Alabama)

TABLE OF CONTENTS

1. Parties
2. Recitals
3. Property and Legal Description
4. Purchase Price and Payment Terms
5. Interest, Amortization, and Balloon
6. Prepayment
7. Possession
8. Taxes, Insurance, and Maintenance
9. Title; Custody of the Deed; Conveyance at Payoff
10. Recording of Contract / Memorandum
11. Existing Encumbrances; Due-on-Sale / Wrap Warning
12. Risk of Loss; Casualty; Condemnation
13. Default and Remedies (Alabama)
14. Assignment
15. Disclosures
16. General Provisions
17. Signatures and Acknowledgment
18. Exhibits

1. PARTIES

THIS CONTRACT FOR DEED (this "Contract") is made and entered into as of [__/__/____] (the "Effective Date") by and between:

• [SELLER LEGAL NAME], of [SELLER ADDRESS] (the "Seller" or "Vendor"); and
• [BUYER LEGAL NAME], of [BUYER ADDRESS] (the "Buyer" or "Vendee").

Seller and Buyer are each a "Party" and together the "Parties."

2. RECITALS

A. Seller is the owner of legal title to the real property described in Section 3 (the "Property").

B. Buyer desires to purchase, and Seller desires to sell, the Property under an installment land contract whereby Seller retains legal title as security until the full Purchase Price is paid, and Buyer takes possession and equitable title in the meantime.

C. The Parties intend that this Contract operate as both a contract of sale and a security instrument under Alabama law.

NOW, THEREFORE, in consideration of the mutual covenants below and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

3. PROPERTY AND LEGAL DESCRIPTION

3.1 Property. Seller agrees to sell and Buyer agrees to buy the real property commonly known as [STREET ADDRESS, CITY, ALABAMA, ZIP], together with all improvements, fixtures, easements, and appurtenances, more particularly described as:

3.2 Personal Property Included. The following personal property is included in the sale: [________________________________] (if none, state "None").

3.3 Condition. Except as expressly stated in this Contract and required disclosures, the Property is sold "AS IS, WHERE IS, WITH ALL FAULTS."

4. PURCHASE PRICE AND PAYMENT TERMS

4.1 Purchase Price. The total purchase price is $[____________] (the "Purchase Price").

4.2 Payment Schedule.

4.3 Application of Payments. Each payment shall be applied first to accrued interest, then to principal, then to advances made by Seller (taxes, insurance, or to protect title).

4.4 Late Charge. A late charge of $[____] (or [____]% of the overdue installment) applies to any payment more than [____] days late, to the extent permitted by Alabama law.

5. INTEREST, AMORTIZATION, AND BALLOON

5.1 Interest Rate. Interest accrues on the unpaid principal at [____]% per annum.

5.2 Amortization. The balance is amortized over [____] months/years.

5.3 Balloon Payment. ☐ This Contract has NO balloon payment. ☐ A balloon payment of the entire unpaid balance of approximately $[____________] is due on [__/__/____] (the "Maturity Date"). Buyer acknowledges that Buyer must refinance or otherwise pay this amount in full on the Maturity Date.

6. PREPAYMENT

Buyer may prepay all or any part of the unpaid principal at any time ☐ without penalty ☐ subject to a prepayment charge of [________________]. Prepayments apply to principal in inverse order of maturity unless the Parties agree otherwise.

7. POSSESSION

Buyer shall be entitled to possession of the Property on [__/__/____] and shall retain possession so long as Buyer is not in default. Buyer's right of possession is subject to this Contract and to the existing encumbrances disclosed in Exhibit B.

8. TAXES, INSURANCE, AND MAINTENANCE

8.1 Taxes and Assessments. Buyer shall pay, before delinquency, all real property taxes and assessments accruing on or after the possession date and shall provide Seller proof of payment on request.

8.2 Insurance. Buyer shall maintain hazard insurance on the improvements for not less than full replacement value, naming Seller as an additional insured / mortgagee-loss payee as its interest may appear, and shall deliver evidence of coverage to Seller.

8.3 Maintenance. Buyer shall keep the Property in good repair, commit no waste, and comply with all laws, ordinances, and recorded restrictions affecting the Property.

8.4 Seller Advances. If Buyer fails to pay taxes, insurance, or other charges necessary to protect title, Seller may advance such sums, which become additional principal bearing interest at the contract rate and are immediately due.

9. TITLE; CUSTODY OF THE DEED; CONVEYANCE AT PAYOFF

9.1 Retention of Legal Title. Seller retains legal title to the Property as security until the Purchase Price and all other sums are paid in full. Buyer holds equitable title and the rights of an equitable owner.

9.2 Form of Deed. Upon payment in full, Seller shall convey marketable title to Buyer by [Statutory Warranty Deed / General Warranty Deed], free of liens other than the Permitted Exceptions in Exhibit B and matters created or suffered by Buyer.

9.3 Deed in Escrow (Optional). ☐ The Parties elect to deposit an executed, recordable deed with an escrow agent, [ESCROW AGENT NAME/ADDRESS], to be released to Buyer upon payment in full and to Seller upon a completed default termination. The escrow agreement attached as Exhibit C governs custody. ☐ The Parties elect NOT to use a deed escrow; Seller shall deliver the deed at payoff.

9.4 Marketable Title / Title Insurance. ☐ Seller shall provide an owner's title insurance commitment showing marketable title within [____] days of the Effective Date. ☐ Buyer waives a title commitment but may obtain a policy at Buyer's expense.

10. RECORDING OF CONTRACT / MEMORANDUM

10.1 Recording. Within [____] days after the Effective Date, the Parties shall record ☐ this Contract ☐ a Memorandum of Contract for Deed (Exhibit D) in the Office of the Judge of Probate of the county where the Property is located, as authorized by Ala. Code § 35-4-50 et seq.

10.2 Effect. Recording gives constructive notice of Buyer's equitable interest under Ala. Code § 35-4-51 and protects Buyer against subsequent purchasers and creditors of Seller.

10.3 Costs. Recording fees and any deed/mortgage recording tax are paid by [Buyer / Seller].

11. EXISTING ENCUMBRANCES; DUE-ON-SALE / WRAP WARNING

11.1 Existing Loans. The Property ☐ is ☐ is not subject to an existing mortgage in favor of [LENDER] with an approximate balance of $[__________] (a "wrap" arrangement).

11.2 Garn-St. Germain Warning. Buyer and Seller acknowledge that most mortgages contain a due-on-sale clause and that, under the Garn-St. Germain Depository Institutions Act (12 U.S.C. § 1701j-3), transfer of the Property by installment land contract may permit the existing lender to accelerate the underlying loan. Seller shall remain responsible for payments on any senior loan that Seller agrees to keep current, and Buyer's payments to Seller do not relieve Seller of that obligation. Both Parties should consult counsel and, where possible, the existing lender before closing.

12. RISK OF LOSS; CASUALTY; CONDEMNATION

12.1 Risk of Loss. From the possession date, risk of loss passes to Buyer, who shall maintain insurance under Section 8.2.

12.2 Casualty. If the Property is materially damaged, insurance proceeds shall be applied, at the Parties' written election, to restoration or to the unpaid balance.

12.3 Condemnation. Any condemnation award shall be applied first to the unpaid balance, with the surplus (if any) to Buyer.

13. DEFAULT AND REMEDIES (ALABAMA)

13.1 Events of Default. Buyer is in default if Buyer (a) fails to pay any installment or other sum when due and the failure continues beyond the cure period in Section 13.2; (b) fails to maintain insurance or pay taxes; (c) commits waste; or (d) breaches any other material covenant and fails to cure within [____] days after written notice.

13.2 Notice and Cure / Grace Period. Before exercising any remedy, Seller shall give Buyer written notice of default specifying the breach and the amount required to cure, and Buyer shall have not less than [30] days (or such longer period as the Parties agree or as a court of equity may require) to cure the default and reinstate this Contract.

13.3 Seller's Remedies. Upon an uncured default, Seller may, subject to the limitations in Section 13.4:

a. accelerate and declare the entire unpaid balance immediately due;
b. sue for the unpaid installments or for the balance due (action on the debt);
c. pursue judicial foreclosure of Seller's vendor's lien / equitable mortgage under Ala. Code § 35-10-11 et seq., with the Property sold and proceeds applied to the debt; or
d. seek to terminate this Contract and recover possession (ejectment) only to the extent permitted by Alabama law and the limitations in Section 13.4.

13.4 Alabama Anti-Forfeiture Protection / Buyer Equity. The Parties acknowledge that Alabama courts treat an installment land contract under which the Buyer has acquired substantial equity as a security device (an equitable mortgage). In that circumstance, a bare contractual forfeiture that strips Buyer of accumulated equity is disfavored, and Seller's remedy is generally foreclosure of the equitable mortgage / vendor's lien, after which Buyer (and other redemptioners) hold the statutory right of redemption under Ala. Code §§ 6-5-248 to 6-5-257 (generally one year from sale, or 180 days for qualifying owner-occupied residential property on which a homestead exemption was claimed). Buyer's equity of redemption shall be cut off only through proceedings that comply with Alabama law.

13.5 Application of Sale Proceeds. Proceeds of any foreclosure or resale apply first to costs and reasonable attorney's fees, then to accrued interest, then to principal and advances, with any surplus paid as required by law.

13.6 Cumulative Remedies; No Waiver. Remedies are cumulative to the extent consistent with Alabama law. Seller's acceptance of a late or partial payment does not waive the default or any remedy.

14. ASSIGNMENT

14.1 Buyer may not assign this Contract or convey its equitable interest without Seller's prior written consent, which shall not be unreasonably withheld. Any permitted assignee takes subject to this Contract.

14.2 Seller may assign its rights (including the right to receive payments) and may pledge this Contract, subject to Buyer's rights hereunder.

15. DISCLOSURES

15.1 Lead-Based Paint. If any residential dwelling on the Property was built before 1978, Seller has delivered the federal lead-based paint disclosure and the EPA pamphlet "Protect Your Family From Lead in Your Home" as required by 42 U.S.C. § 4852d and 24 C.F.R. Part 35 / 40 C.F.R. Part 745. ☐ Pre-1978 (disclosure attached) ☐ Built 1978 or later (not applicable).

15.2 Property Condition. Seller has disclosed known material defects to the extent required by Alabama law.

15.3 Other Disclosures. [Flood zone, HOA, septic/well, and any other required disclosures: ________________________________].

16. GENERAL PROVISIONS

16.1 Governing Law. This Contract is governed by the laws of the State of Alabama.

16.2 Time of the Essence. Time is of the essence, subject to the notice and cure rights in Section 13.

16.3 Notices. Notices must be in writing and delivered by personal delivery, certified U.S. mail (return receipt requested), or nationally recognized overnight courier to the addresses in Section 1.

16.4 Entire Agreement; Amendment. This Contract and its Exhibits are the entire agreement and may be amended only in a writing signed by both Parties.

16.5 Severability. If any provision is held invalid, the remainder remains in effect.

16.6 Attorney's Fees. The prevailing Party in any action arising under this Contract is entitled to reasonable attorney's fees and costs, as permitted by law.

16.7 Counterparts; Electronic Signatures. This Contract may be executed in counterparts and by electronic signature, each deemed an original.

16.8 Successors. This Contract binds and benefits the Parties and their heirs, successors, and permitted assigns.

17. SIGNATURES AND ACKNOWLEDGMENT

IN WITNESS WHEREOF, the Parties have executed this Contract as of the Effective Date.

SELLER:

Signature: [________________________________] Date: [__/__/____]
Printed Name: [________________________________]

BUYER:

Signature: [________________________________] Date: [__/__/____]
Printed Name: [________________________________]

Acknowledgment (for recording — Ala. Code § 35-4-29)

State of Alabama
County of [____________________]

I, the undersigned authority, a Notary Public in and for said county in said state, hereby certify that [NAME(S)], whose name(s) is/are signed to the foregoing instrument, and who is/are known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he/she/they executed the same voluntarily on the day the same bears date.

Given under my hand this [____] day of [____________], [____].

[________________________________]
Notary Public
My commission expires: [__/__/____]

18. EXHIBITS

• Exhibit A — Legal Description of the Property
• Exhibit B — Permitted Exceptions / Existing Encumbrances
• Exhibit C — Deed Escrow Agreement (if applicable)
• Exhibit D — Memorandum of Contract for Deed (for recording)

Sources and References

• Ala. Code § 35-4-50 — Conveyances required to be recorded in office of probate judge: https://law.justia.com/codes/alabama/title-35/chapter-4/article-3/division-1/section-35-4-50/
• Ala. Code § 35-4-20 — Conveyance to be in writing, signed, attested/acknowledged: https://law.justia.com/codes/alabama/title-35/chapter-4/
• Ala. Code § 35-10-11 et seq. — Foreclosure of mortgages and instruments securing payment of money: https://law.justia.com/codes/alabama/title-35/chapter-10/
• Ala. Code § 6-5-248 — Who may redeem; priorities (statutory redemption): https://codes.findlaw.com/al/title-6-civil-practice/al-code-sect-6-5-248/
• Ala. Code § 8-8-1 — Maximum rates of interest / usury: https://law.justia.com/codes/alabama/title-8/chapter-8/
• Garn-St. Germain Act, 12 U.S.C. § 1701j-3: https://www.law.cornell.edu/uscode/text/12/1701j-3
• Lead-Based Paint disclosure, 42 U.S.C. § 4852d: https://www.law.cornell.edu/uscode/text/42/4852d