Contract for Deed (Land Contract) - Delaware

CONTRACT FOR DEED (INSTALLMENT LAND CONTRACT)

(Delaware)

TABLE OF CONTENTS

1. Document Header and Parties
2. Definitions
3. Property; Legal Description
4. Purchase Price; Down Payment; Installment Terms
5. Interest; Amortization; Balloon; Prepayment
6. Legal Title; Escrow of Deed; Delivery at Payoff
7. Possession; Taxes, Insurance, and Maintenance
8. Buyer's Equitable Interest; Recording
9. Default and Remedies (Delaware Forfeiture / Equity Rule)
10. Title; Marketability; Title Insurance
11. Risk of Loss; Condemnation
12. Assignment; Due-on-Sale (Garn–St. Germain)
13. Disclosures (Lead-Based Paint; Property Condition)
14. General Provisions
15. Execution; Notarial Acknowledgment
16. Exhibits and Schedules

1. DOCUMENT HEADER AND PARTIES

This Contract for Deed (also known as an Installment Land Contract, this "Contract") is made as of [__/__/____] (the "Effective Date") by and between:

a. Seller: [SELLER LEGAL NAME], a [STATE] [ENTITY TYPE OR "individual"], whose address is [SELLER ADDRESS] ("Seller"); and

b. Buyer: [BUYER LEGAL NAME], a [STATE] [ENTITY TYPE OR "individual"], whose address is [BUYER ADDRESS] ("Buyer").

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

Recitals

A. Seller is the fee simple owner of the real property described in Exhibit A (the "Property").

B. Buyer desires to purchase, and Seller desires to sell, the Property on an installment basis under which Seller retains legal title as security until the Purchase Price is paid in full, at which time Seller will convey title by deed.

C. The Parties acknowledge that Delaware has no specific installment-land-contract statute and that the Delaware Court of Chancery may grant equitable relief, including relief against forfeiture.

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

2. DEFINITIONS

"Business Day" – any day other than Saturday, Sunday, or a day on which Delaware-chartered banks are authorized or required to close.

"Closing" / "Final Closing" – delivery of the Deed upon payment in full of all amounts due under this Contract.

"Deed" – a [SELECT: Warranty Deed / Special Warranty Deed] in recordable form conveying the Property to Buyer subject only to the Permitted Exceptions.

"Default Rate" – [____]% per annum or the maximum rate permitted by Delaware law, whichever is less.

"Equity" – the difference between the fair market value of the Property and the Unpaid Balance, plus the value of Buyer's improvements.

"Permitted Exceptions" – the matters listed in Exhibit B.

"Purchase Price" – the amount set forth in Section 4.1.

"Unpaid Balance" – the principal portion of the Purchase Price remaining unpaid at any time, together with accrued interest and other charges.

3. PROPERTY; LEGAL DESCRIPTION

3.1 Property. Seller agrees to sell and Buyer agrees to buy the real property located at [PROPERTY ADDRESS], [CITY/TOWN], [SELECT: New Castle / Kent / Sussex] County, Delaware, legally described in Exhibit A, together with all improvements, fixtures, easements, and appurtenances.

3.2 Personal Property Included. The following personal property is included, free of liens: [LIST OR "None"].

3.3 Condition; "As-Is." Except as expressly stated herein and in the disclosures attached, Buyer accepts the Property in its present "AS-IS" condition, subject to Buyer's inspection rights in Section 13.

4. PURCHASE PRICE; DOWN PAYMENT; INSTALLMENT TERMS

4.1 Purchase Price. The total Purchase Price is $[____________].

4.2 Down Payment. Buyer shall pay a down payment of $[____________] on or before [__/__/____].

4.3 Financed Amount. The amount financed (Purchase Price less down payment) is $[____________] (the "Financed Amount").

4.4 Installment Payments. Buyer shall pay the Financed Amount, with interest, in installments as follows:

4.5 Application of Payments. Payments are applied first to late charges and costs, then to accrued interest, then to principal.

4.6 Maximum Lawful Rate. No provision shall require interest exceeding the maximum permitted by Delaware law; any excess shall be applied to principal or refunded.

5. INTEREST; AMORTIZATION; BALLOON; PREPAYMENT

5.1 Interest. Interest accrues on the Unpaid Balance at the rate stated in Section 4.4 from the Effective Date.

5.2 Balloon Disclosure. [IF APPLICABLE] THIS CONTRACT CONTAINS A BALLOON PAYMENT. A SUBSTANTIAL FINAL PAYMENT OF $[__________] WILL BE DUE ON [__/__/____]. BUYER MAY NEED TO REFINANCE OR OBTAIN OTHER FUNDS TO PAY THE BALLOON.

5.3 Prepayment. Buyer may prepay all or part of the Unpaid Balance at any time [SELECT: without penalty / subject to a prepayment charge of [____]%]. Partial prepayments are applied to principal and do not postpone any scheduled payment.

5.4 Amortization Statement. Upon Buyer's written request, Seller shall provide a statement of the Unpaid Balance and amounts applied to principal and interest.

6. LEGAL TITLE; ESCROW OF DEED; DELIVERY AT PAYOFF

6.1 Retention of Legal Title. Seller retains legal title to the Property as security until Buyer has paid the Purchase Price and performed all obligations in full. Buyer holds equitable title and the right of possession.

6.2 Escrow of Deed (Optional). [SELECT ONE]
☐ Seller shall deposit an executed, recordable Deed with [ESCROW AGENT/ATTORNEY] to be held in escrow and delivered to Buyer upon payment in full.
☐ The Deed shall be delivered by Seller directly upon payment in full; no deed is escrowed.

6.3 Delivery at Payoff. Within [____] Business Days after Buyer pays all amounts due, Seller shall execute and deliver the Deed and record a release of this Contract with the Recorder of Deeds at [SELECT: Seller's / Buyer's] expense.

7. POSSESSION; TAXES, INSURANCE, AND MAINTENANCE

7.1 Possession. Buyer is entitled to possession on [__/__/____].

7.2 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 upon request.

7.3 Insurance. Buyer shall keep the improvements insured against fire and other casualty for not less than [SELECT: replacement cost / the Unpaid Balance], naming Seller as an additional insured / loss payee as its interest appears.

7.4 Maintenance. Buyer shall maintain the Property in good repair, commit no waste, and comply with all laws and any association requirements.

7.5 Common Interest Community. [IF APPLICABLE] Buyer shall pay all association assessments and comply with the governing documents; Seller has delivered the disclosures required by the Delaware Uniform Common Interest Ownership Act (25 Del. C. ch. 81).

8. BUYER'S EQUITABLE INTEREST; RECORDING

8.1 Recording. This Contract (or a Memorandum of Installment Land Contract in the form of Exhibit C) shall be recorded with the Recorder of Deeds for [SELECT: New Castle / Kent / Sussex] County, Delaware, pursuant to 9 Del. C. § 9605, to provide constructive notice of Buyer's interest and protect Buyer against subsequent purchasers and creditors of Seller.

8.2 Realty Transfer Tax; Affidavit. The Delaware realty transfer tax (30 Del. C. § 5401 et seq.) and the affidavit of residence and gain required under 9 Del. C. § 9605(d)–(e) apply to recordable conveyance instruments as provided by law; allocate and pay as [SELECT: Buyer / Seller] per Section 14.

8.3 No Encumbrance by Seller. Seller shall not further encumber or convey the Property in a manner impairing Buyer's interest, and shall apply Buyer's payments to keep any underlying loan current (see Section 12.3).

9. DEFAULT AND REMEDIES (DELAWARE FORFEITURE / EQUITY RULE)

9.1 Events of Default. Buyer is in default if Buyer (a) fails to pay any installment within [____] days after its due date; (b) fails to pay taxes or insurance; (c) commits waste; or (d) breaches any other material covenant and fails to cure within [____] days after written notice.

9.2 Notice and Right to Cure. Seller shall give Buyer written notice of default specifying the default and a cure period of not less than [30] days. Buyer may cure by paying all past-due amounts plus late charges and Seller's reasonable costs.

9.3 DELAWARE REMEDIES. Delaware has no installment-land-contract statute prescribing a forfeiture/cancellation procedure; remedies arise from general contract and equity principles. Upon an uncured default, Seller may pursue, subject to applicable law and equity:
a. Action for the price / damages in the Superior Court;
b. Specific performance / foreclosure of the vendor's equitable lien in the Court of Chancery (10 Del. C. § 341), resulting in a judicial sale of the Property with proceeds applied to the Unpaid Balance, costs, and fees, and any surplus to Buyer; or, where the transaction is treated as a mortgage, foreclosure under 10 Del. C. ch. 51 (scire facias sur mortgage); or
c. Contractual forfeiture (cancellation of this Contract and recovery of possession), retaining payments made as liquidated damages and reasonable rental value.

9.4 Equitable Relief Against Forfeiture. The Parties acknowledge that the Delaware Court of Chancery may relieve Buyer against forfeiture — including by allowing a reasonable period to cure or by ordering a judicial sale — where Buyer has acquired substantial Equity or substantially performed and forfeiture would be inequitable. Where Buyer has Equity, Seller should expect to proceed by foreclosure/judicial sale rather than summary forfeiture.

9.5 Cumulative Remedies; Attorneys' Fees. Remedies are cumulative to the extent permitted by law. The prevailing Party is entitled to reasonable attorneys' fees and costs as allowed by law or this Contract.

10. TITLE; MARKETABILITY; TITLE INSURANCE

10.1 Marketable Title at Payoff. At Final Closing, Seller shall convey marketable, insurable fee simple title subject only to the Permitted Exceptions.

10.2 Title Insurance. [SELECT: Seller / Buyer] shall provide, at [ITS] expense, an owner's title insurance commitment from [TITLE COMPANY] showing title vested in Seller as of the Effective Date, and an owner's policy issued to Buyer at Final Closing.

10.3 Seller's Existing Liens. Seller represents the Property is encumbered only by: [LIST or "none"]. Seller shall not allow any superior lien to go into default.

11. RISK OF LOSS; CONDEMNATION

11.1 Risk of Loss. From the possession date, risk of loss passes to Buyer. Insurance proceeds shall be applied, at Buyer's election and subject to Seller's security interest, to restoration or to the Unpaid Balance.

11.2 Condemnation. Any condemnation award shall be applied first to the Unpaid Balance, with the balance to Buyer, unless the Parties agree to restoration.

12. ASSIGNMENT; DUE-ON-SALE (GARN–ST. GERMAIN)

12.1 Assignment by Buyer. Buyer may not assign this Contract without Seller's prior written consent, which shall not be unreasonably withheld.

12.2 Assignment by Seller. Seller may assign its rights to payment subject to Buyer's rights hereunder.

12.3 Due-on-Sale Warning (Garn–St. Germain). If the Property is subject to an existing mortgage, entering into this Contract may trigger a "due-on-sale" clause permitting the lender to accelerate under the federal Garn–St. Germain Depository Institutions Act (12 U.S.C. § 1701j-3). Seller represents that [SELECT: there is no underlying loan / the lender has consented / Buyer assumes this risk]. Seller shall apply Buyer's payments to keep any underlying loan current.

13. DISCLOSURES (LEAD-BASED PAINT; PROPERTY CONDITION)

13.1 Lead-Based Paint (Covered Target Housing). Before Buyer is obligated under this Contract, Seller must complete the current federal process for 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 large-type Lead Warning Statement and Buyer-signed acknowledgments to this Contract; and allow Buyer a 10-day risk-assessment or inspection opportunity unless the parties mutually agree to a different period. ☐ Federal coverage and any exemption reviewed ☐ Current warning/disclosure attachment completed ☐ Pamphlet and available reports delivered ☐ Inspection period completed, waived, or changed by mutual agreement.

13.2 Delaware property-condition disclosure. For a transfer covered by 6 Del. C. ch. 25, including an installment land sale contract, unless a § 2577 exemption applies, Seller or the responsible agent shall deliver the Delaware Seller's Disclosure of Real Property Condition Report to Buyer or Buyer's agent before Buyer makes an offer. Buyer and Seller shall sign the report and attach it to this Contract. Seller shall update the written disclosure for material changes known before final settlement. If an exemption applies, identify it here: [________________________________].

13.3 Radon disclosure where a dwelling exists. For covered residential property with an existing dwelling, Seller shall give Buyer the required radon information, any radon test or inspection information in Seller's possession, and notice of known radon hazards. Buyer and Seller shall complete and sign the Delaware Real Estate Commission's radon disclosure form, recording Buyer's receipt of information and option to test. Attach the completed form to this Contract.

13.4 Inspection. Buyer [SELECT: has inspected / has [____] days to inspect] the Property and accepts it subject to such inspection.

14. GENERAL PROVISIONS

14.1 Governing Law. This Contract is governed by the laws of the State of Delaware.

14.2 Forum. Exclusive venue lies in the state courts in [SELECT: New Castle / Kent / Sussex] County, Delaware (including, for equitable relief, the Court of Chancery).

14.3 Notices. Notices shall be in writing and delivered by hand, certified mail (return receipt requested), or nationally recognized overnight courier to the addresses in Section 1.

14.4 Time of the Essence. Time is of the essence as to all payment obligations, subject to the notice and cure rights and the equity principles in Section 9.

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

14.6 Severability. If any provision is held invalid, the remainder shall remain enforceable.

14.7 Counterparts; Electronic Signatures. This Contract may be executed in counterparts and by electronic signature.

14.8 Successors and Assigns. This Contract binds and benefits the Parties and their permitted successors and assigns.

15. EXECUTION; NOTARIAL ACKNOWLEDGMENT

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

SELLER:
________________________________________
[SELLER NAME]
Date: [__/__/____]

BUYER:
________________________________________
[BUYER NAME]
Date: [__/__/____]

Notary Acknowledgment

STATE OF DELAWARE
COUNTY OF [____________]

On this [____] day of [MONTH], [YEAR], before me personally appeared [NAME(S)], known to me (or satisfactorily proven) to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged that he/she/they executed the same for the purposes therein contained.

________________________________________
Notary Public, State of Delaware
My Commission Expires: ___________
[SEAL]

16. EXHIBITS AND SCHEDULES

• Exhibit A – Legal Description of the Property
• Exhibit B – Permitted Exceptions
• Exhibit C – Memorandum of Installment Land Contract (for recording)
• Exhibit D – Lead-Based Paint Disclosure (pre-1978 housing)
• Exhibit E – Seller's Disclosure of Real Property Condition Report
• Exhibit F – Delaware radon disclosure form (where a dwelling exists)
• Schedule 1 – Amortization Schedule

EXHIBIT D — 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 BASIS, LOCATION, AND CONDITION: ________________________________] ☐ Seller has no knowledge of lead-based paint or lead-based-paint hazards.

Records and reports provided to Buyer: [LIST EACH AVAILABLE LEAD-HAZARD RECORD OR REPORT PROVIDED: ________________________________] ☐ Seller has no such records or reports available.

Buyer acknowledgment: By signing below, Buyer acknowledges receipt of Seller's disclosure and the records or reports listed above, and receipt of the federally approved lead-hazard information pamphlet. Buyer also states that Buyer has read the Lead Warning Statement and understands its contents.

Inspection opportunity: Buyer ☐ received a 10-day opportunity to conduct a lead risk assessment or inspection before becoming obligated under this Contract; ☐ received a different period mutually agreed in writing: [____] days; or ☐ waives that opportunity.

Seller's agent certification, if an agent is involved: 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 (repeat for each involved agent): [________________________________] Agent signature: [________________________________] Date: [__/__/____]

By signing, Seller, any involved agent, and Buyer certify the accuracy of their statements to the best of their knowledge.

Seller signature (repeat for each seller): [________________________________] Date: [__/__/____]

Buyer signature (repeat for each purchaser): [________________________________] Date: [__/__/____]

Seller and any involved 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

• 9 Del. C. § 9605 (recordation of instruments) — https://law.justia.com/codes/delaware/title-9/chapter-96/section-9605/
• 25 Del. C. (Property; deeds and conveyances) — https://delcode.delaware.gov/title25/
• 10 Del. C. ch. 51 (mortgage foreclosure / scire facias) — https://delcode.delaware.gov/title10/
• 10 Del. C. § 341 (Court of Chancery equity jurisdiction) — https://delcode.delaware.gov/title10/c003/
• 30 Del. C. § 5401 et seq. (realty transfer tax) — https://delcode.delaware.gov/title30/
• Garn–St. Germain Act, 12 U.S.C. § 1701j-3 — https://www.law.cornell.edu/uscode/text/12/1701j-3
• Lead-Based Paint, 42 U.S.C. § 4852d — https://www.law.cornell.edu/uscode/text/42/4852d