Contract for Deed (Land Contract) - Alabama

CONTRACT FOR DEED (LAND CONTRACT)

(State of Alabama)

This instrument was prepared by: [INDIVIDUAL PREPARER NAME], [MAILING ADDRESS]

Before you use this: For a dwelling sale, confirm whether federal consumer-credit and seller-financing rules apply. The three-property seller-financer exclusion in 12 C.F.R. § 1026.36(a)(4) requires fully amortizing financing; the one-property exclusion in subsection (a)(5) has different conditions. Review those conditions before selecting a balloon payment.

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").

Marital status of each individual Seller/Vendor: [SELLER NAME: MARRIED TO ______ / UNMARRIED: ________________________________]

Homestead and spousal assent: ☐ The Property is not a homestead subject to Ala. Code § 6-10-3. ☐ The Property may be such a homestead; obtain the Seller's spouse's voluntary signature and acknowledged assent below and on the final deed if required.

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 under this Contract in the meantime.

C. The Parties intend that Seller retain title pending payment and that their respective rights upon default be determined under Section 13 and applicable 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 [__/__/____]. Buyer's right of possession is subject to this Contract, the existing encumbrances disclosed in Exhibit B, and the default process in Section 13.

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 until the Purchase Price and all other sums are paid in full. Buyer holds the rights granted by this Contract and any rights recognized by applicable law.

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 completed 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 or returned to Seller upon Buyer's signed post-default release or a final court order determining the Parties' rights. The escrow instructions completed and signed in Exhibit C govern 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 submit ☐ this Contract ☐ a Memorandum of Contract for Deed (Exhibit D) for recording in the Office of the Judge of Probate of the county where the Property is located. The instrument must be executed in accordance with law to be admitted to record under Ala. Code § 35-4-51.

10.2 Effect. Filing a lawfully executed contract or memorandum for registration gives notice of its contents under Ala. Code § 35-4-51. Whether it establishes priority against later purchasers, mortgagees, or judgment creditors depends on § 35-4-90 and the instrument's legal effect; recording alone is not an unconditional priority guarantee.

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 $[__________]. Any proposed wrap financing terms are: [________________].

11.2 Garn-St. Germain Warning. If an existing loan contains an enforceable due-on-sale clause, transfer of an interest in the Property by installment land contract may permit the existing lender to accelerate the loan under 12 U.S.C. § 1701j-3 and the loan contract, subject to any protected-transfer exception in subsection (d). 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. ask a court to determine whether foreclosure of a vendor's lien or equitable mortgage is available and, if so, order the appropriate relief; 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 Court-Order Safeguard. The Parties agree that Seller will not take possession, retain Buyer's payments as forfeited, or transfer the Property free of Buyer's interest solely by declaring a default. After an uncured default, Seller must obtain Buyer's signed post-default release or a final court order determining the Parties' rights before doing so. This clause is the Parties' agreed procedure; it does not declare that every installment land contract is an equitable mortgage. If a foreclosure sale occurs and Ala. Code § 6-5-248 applies, eligible persons may exercise the statutory redemption rights and periods stated there.

13.5 Application of Sale Proceeds. Subject to applicable law, lien priorities, and any court order, proceeds of any foreclosure or resale apply first to permitted costs and reasonable attorney's fees, then to accrued interest, then to principal and advances, with any surplus paid to the person entitled to it.

13.6 Cumulative Remedies. Remedies are cumulative only to the extent consistent with Alabama law and the relief a court grants.

14. ASSIGNMENT

14.1 Buyer may not assign this Contract or convey Buyer's interest under it 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 (Covered Target Housing). Before Buyer is obligated under this Contract, Seller must complete the federal process if the Property is covered target housing: provide the EPA lead-hazard pamphlet; disclose known lead-based paint and known lead-based-paint hazards; provide every available lead-hazard evaluation report; attach the Lead Warning Statement and Buyer-signed acknowledgments on a separate sheet; and allow Buyer a 10-day risk-assessment or inspection opportunity unless the parties mutually agree to a different period. If a seller's agent participates, that agent must complete the certification and signature in Exhibit E. ☐ Federal coverage and any exemption reviewed ☐ Separate signed warning/disclosure attachment completed ☐ Pamphlet and available reports delivered ☐ Inspection opportunity provided or waived by Buyer. The separate attachment is Exhibit E.

15.2 Property Condition. Seller discloses the following known Property conditions: [DESCRIBE OR STATE NONE: ________________________________]. Attach any additional disclosure required for this transaction by applicable 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. An electronic signature may be used only if permitted by applicable execution and recording requirements.

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: [________________________________]

SELLER'S SPOUSE (if assent is required for a homestead conveyance under Ala. Code § 6-10-3):

I voluntarily sign and assent to the conveyance contemplated by this Contract.

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

Acknowledgment (for recording — Ala. Code §§ 35-4-29 and 6-10-3; include the Seller's spouse if signed above)

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 — Complete legal description of the Property (required)
• Exhibit B — Permitted exceptions and existing encumbrances (state "None" if none)
• Exhibit C — Signed deed escrow instructions (complete if escrow elected)
• Exhibit D — Signed memorandum of contract for deed (complete if that recording option is elected)
• Exhibit E — Separate Lead Warning Statement and disclosure attachment (if federal target-housing rules apply; complete before Buyer is obligated)

EXHIBIT A — LEGAL DESCRIPTION

Attach the complete legal description from the current title evidence, including any lot, block, subdivision, section, township, range, metes-and-bounds, or recorded plat reference needed to identify the Property. The street address and parcel number in Section 3 are for reference.

Complete legal description:

[____________________________________________________________]

[____________________________________________________________]

[____________________________________________________________]

Additional signed pages attached: ☐ Yes ☐ No. Number of pages: [____].

EXHIBIT B — PERMITTED EXCEPTIONS AND EXISTING ENCUMBRANCES

Permitted exceptions at final conveyance (identify each recorded instrument, easement, restriction, or other exception; if none, write "None"):

[____________________________________________________________]

[____________________________________________________________]

Existing mortgages or liens before payoff (identify lender, recording reference, and balance; if none, write "None"):

[____________________________________________________________]

[____________________________________________________________]

Seller's duty to convey title under Section 9.2 remains subject only to the completed permitted-exception list and matters created or suffered by Buyer.

EXHIBIT C — DEED ESCROW INSTRUCTIONS (COMPLETE ONLY IF ELECTED)

Seller, Buyer, and [ESCROW AGENT NAME] agree that the agent will hold the executed deed described in Section 9.3 for the benefit of the Parties under the Contract dated [__/__/____]. The agent shall release the deed to Buyer upon written evidence of full payment signed by Seller or a final court order directing release. The agent shall return it to Seller only upon Buyer's signed post-default release or a final court order directing return. While a dispute is pending, the agent shall hold the deed, unless the Parties jointly direct otherwise in writing or a court orders disposition.

Agent address and notice contact: [________________________________________________]

Escrow fee and payer: [________________________________________________]

Seller signature: [________________________] Date: [__/__/____]

Buyer signature: [________________________] Date: [__/__/____]

Escrow agent acceptance and signature: [________________________] Date: [__/__/____]

EXHIBIT D — MEMORANDUM OF CONTRACT FOR DEED (COMPLETE ONLY IF ELECTED)

State of Alabama, County of [________________]

This instrument was prepared by: [INDIVIDUAL PREPARER NAME], [MAILING ADDRESS]

For notice under Ala. Code § 35-4-51, Seller [FULL LEGAL NAME], marital status [MARRIED TO ______ / UNMARRIED], and Buyer [FULL LEGAL NAME] state that they entered into a Contract for Deed dated [__/__/____] covering the real property in Exhibit A, which is attached to and incorporated in this Memorandum. The Contract grants Buyer an interest in the Property and requires Seller to convey title upon Buyer's full performance. The Contract's full terms govern the Parties' rights; this Memorandum does not replace it.

Seller address: [________________________________________________]

Buyer address: [________________________________________________]

Seller signature: [________________________] Date: [__/__/____]

Buyer signature: [________________________] Date: [__/__/____]

Seller's spouse voluntary signature and assent, if required under Ala. Code § 6-10-3: [________________________] Date: [__/__/____]

Acknowledgment for recording: I, the undersigned Notary Public in and for [________________] County, Alabama, certify that [SELLER, BUYER, AND SPOUSE NAMES AS APPLICABLE], known to me, acknowledged before me that, being informed of the contents of this Memorandum, they executed it voluntarily on the date it bears.

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

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

EXHIBIT E — LEAD WARNING AND DISCLOSURE ATTACHMENT

Property: [________________________________________________]

LEAD WARNING STATEMENT

Every purchaser of any interest in residential real property on which a residential dwelling was built prior to 1978 is notified that such property may present exposure to lead from lead-based paint that may place young children at risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The seller of any interest in residential real property is required to provide the buyer with any information on lead-based paint hazards from risk assessments or inspections in the seller's possession and notify the buyer of any known lead-based paint hazards. A risk assessment or inspection for possible lead-based paint hazards is recommended prior to purchase.

Seller disclosure: ☐ Seller knows of lead-based paint or lead-based-paint hazards: [DESCRIBE WHAT, BASIS FOR KNOWLEDGE, LOCATION, AND PAINT CONDITION: ________________________________] ☐ Seller has no knowledge of lead-based paint or lead-based-paint hazards. Available lead-hazard evaluation reports provided to Buyer: [LIST EACH OR STATE NONE: ________________________________].

Buyer acknowledgment: By signing below, Buyer acknowledges reading and understanding the Lead Warning Statement, receiving the EPA lead-hazard pamphlet, and receiving the reports listed above. Buyer ☐ received the opportunity to conduct a risk assessment or inspection for [10 / MUTUALLY AGREED DIFFERENT NUMBER: ____] days before becoming obligated under this Contract; or ☐ waives that opportunity.

Seller's agent certification, if an agent represents Seller: I informed Seller of Seller's obligations under 42 U.S.C. § 4852d and am aware of my duty to ensure compliance with the federal lead-disclosure requirements.

Agent name: [________________________________] Agent signature: [________________________________] Date: [__/__/____]

Buyer signature: [________________________________] Date: [__/__/____]

Seller signature: [________________________________] Date: [__/__/____]

Seller and any agent must retain a copy of the completed attachment for at least three years from completion of the sale under 40 C.F.R. § 745.113(c)(1).

Sources and References

• Ala. Code § 35-4-50 — Recording office for conveyances: https://alison.legislature.state.al.us/graphql
• Ala. Code §§ 35-4-20, 35-4-23 — Conveyance execution and acknowledgment alternative: https://alison.legislature.state.al.us/graphql
• Ala. Code §§ 35-10-3, 35-10-11 — Foreclosure without a power of sale and the mortgage definition: https://alison.legislature.state.al.us/graphql
• Ala. Code § 6-5-248 — Statutory redemption after sale: https://alison.legislature.state.al.us/graphql
• Ala. Code §§ 8-8-1, 8-8-5 — Interest limits and credit-sale exception: https://alison.legislature.state.al.us/graphql
• Garn-St. Germain Act, 12 U.S.C. § 1701j-3: https://uscode.house.gov/us/usc/119-124/t12/s1701j-3/
• Lead-Based Paint disclosure, 42 U.S.C. § 4852d: https://uscode.house.gov/us/usc/119-124/t42/s4852d/
• Lead-disclosure attachment, 40 C.F.R. § 745.113: https://www.ecfr.gov/current/title-40/part-745/section-745.113
• Seller-financing exclusions, 12 C.F.R. § 1026.36(a)(4)–(5): https://www.ecfr.gov/current/title-12/part-1026/section-1026.36