Contract for Deed (Land Contract) - Illinois

CONTRACT FOR DEED (INSTALLMENT SALES CONTRACT)

State of Illinois — Installment Sale with Retained Legal Title

IMPORTANT — ILLINOIS INSTALLMENT SALES CONTRACT ACT (765 ILCS 67). For residential real estate (1–4 dwelling units) sold on installments payable for at least one year, where the seller enters into more than three such contracts in a 12-month period, this transaction is governed by the Installment Sales Contract Act, 765 ILCS 67/ (effective January 1, 2018). The Act imposes mandatory disclosures, recording within 10 days, a 3-business-day cooling-off period, a 90-day right to cure, a prohibition on prepayment penalties, and other buyer protections that cannot be waived. This template is drafted to support compliance but must be reviewed by Illinois counsel.

1. PARTIES

This Contract for Deed (an "Installment Sales Contract" under 765 ILCS 67, also called a "Land Contract," "Contract for Deed," "Bond for Deed," or "Agreement for Deed," and referred to herein as this "Contract") is made on [__/__/____] by and between:

SELLER: [________________________________], whose address is [________________________________] ("Seller"); and

BUYER: [________________________________], whose address is [________________________________] ("Buyer").

Seller and Buyer are referred to collectively as the "Parties."

2. PROPERTY AND LEGAL DESCRIPTION

Seller agrees to sell and Buyer agrees to buy, on the installment terms below, the residential real property located in the County of [________________], State of Illinois, commonly known as:

Street Address: [________________________________]

Permanent Index Number (PIN): [________________________________]

Legal Description: (insert full legal description or attach as Exhibit A)

[____________________________________________________________]

together with all improvements, fixtures, easements, and appurtenances (the "Property").

Required disclosures under 765 ILCS 67/10: ☐ Address, PIN, and legal description disclosed ☐ Price disclosed ☐ Assessed value disclosed ☐ Known liens/encumbrances disclosed ☐ Known code violations disclosed ☐ Buyer's repair duties disclosed ☐ Buyer's right to inspect (large, bold font) disclosed ☐ If condemned, disclosed in large, bold font.

3. PURCHASE PRICE, DOWN PAYMENT, AND INSTALLMENT TERMS

3.1 Amortization Schedule. An amortization schedule meeting 765 ILCS 67/5 is attached as Exhibit C, showing each payment's date, the amount applied to principal, the resulting principal balance, and the amount applied to interest.

3.2 Balloon Payment Disclosure. ☐ This Contract requires a balloon payment of $[________________] on the maturity date. Buyer acknowledges Buyer may need to refinance to pay it.

3.3 Application of Payments. Payments shall be applied first to accrued late charges, then to accrued interest, then to principal.

3.4 Interest Rate Compliance. The interest rate shall not exceed the maximum permitted under Illinois law.

4. TITLE; DEED HELD PENDING PAYOFF; ESCROW

4.1 Retention of Legal Title. Seller retains legal title until Buyer has paid the Purchase Price (or the portion specified) in full and performed all obligations. Buyer holds equitable title and is entitled to possession.

4.2 Delivery of Deed at Payoff. Upon Buyer's full payment and performance, Seller shall execute and deliver a [Warranty Deed / Special Warranty Deed] conveying marketable, fee-simple title subject only to the Permitted Encumbrances on Exhibit B. The Contract must clearly disclose when and how title is conveyed (765 ILCS 67/10).

4.3 Escrow of Deed (Optional). ☐ Seller shall deposit an executed deed with [escrow/title company] to be delivered upon payment in full.

4.4 Title Insurance. ☐ Buyer may obtain an owner's title insurance policy at Buyer's expense.

5. RECORDING (MANDATORY — 765 ILCS 67/20)

5.1 Recording Requirement. Seller MUST record this Contract or a memorandum of it with the County Recorder within 10 days after execution (765 ILCS 67/20). If Seller fails to record, Buyer has the right to rescind the Contract until it is recorded, and if title becomes clouded while unrecorded, Buyer may rescind up to 90 days after discovering the defect.

5.2 Memorandum. ☐ The Parties will record a memorandum containing the bare-bones information permitted by the Act in lieu of the full Contract.

5.3 Transfer Tax. Illinois real estate transfer tax (35 ILCS 200/31-1 et seq.) and any county/municipal transfer taxes may apply on recording of the contract and/or the final deed.

6. POSSESSION

Buyer is entitled to possession of the Property on [__/__/____] and shall maintain possession so long as Buyer is not in default. Possession does not transfer legal title.

7. TAXES, INSURANCE, AND MAINTENANCE; REPAIRS

7.1 Property Taxes. ☐ Buyer shall pay all real property taxes directly when due. ☐ Buyer shall pay taxes to Seller/escrow in installments. The Contract must disclose all tax and insurance payment details (765 ILCS 67/10).

7.2 Insurance. Buyer shall keep the Property insured against fire and casualty for not less than $[________________], naming Seller as additional insured / loss payee. Under 765 ILCS 67/35, insurance proceeds from damage are to be used to make repairs unless the Parties agree otherwise in writing or Seller's mortgage requires principal paydown (with corresponding credit to Buyer).

7.3 Repairs (765 ILCS 67/25 & 67/65). Seller is responsible for repairs UNLESS, and only to the extent that, this Contract sets forth in writing the specific repairs Buyer is required to make. Buyer cannot be placed in default for failing to repair conditions that existed before the date of sale.

7.4 Maintenance. Buyer shall keep the Property in good repair (subject to Section 7.3), shall not commit waste, and shall comply with applicable laws and ordinances.

8. DEFAULT AND REMEDIES

8.1 Events of Default. Buyer is in default if Buyer (a) fails to make any payment when due and fails to cure within the 90-day cure period below; (b) fails to pay taxes or insurance Buyer is obligated to pay; (c) commits waste; or (d) breaches any other material term and fails to cure.

8.2 90-Day Right to Cure (765 ILCS 67/40). Buyer has a 90-day right to cure any default. During that 90-day period, Buyer may cure by making all payments, fees, and charges currently due. This cure right cannot be waived (765 ILCS 67/50).

8.3 Seller's Remedies — Forfeiture vs. Mandatory Foreclosure.

(a) Mandatory Judicial Foreclosure (Illinois Mortgage Foreclosure Law). Under 735 ILCS 5/15-1106, where the unpaid balance is less than 80% of the original purchase price, the installment contract must be foreclosed as a mortgage under the Illinois Mortgage Foreclosure Law (judicial foreclosure with redemption rights). This protects Buyer's equity; eviction is NOT available in that situation.

(b) Forfeiture / Eviction (Limited). Where Buyer has little equity (unpaid balance is 80% or more of the original price) and the Contract contains an express, narrowly construed forfeiture clause with a time-is-of-the-essence provision, Seller may seek forfeiture and recover possession through a Forcible Entry and Detainer (eviction) action (735 ILCS 5/9-101 et seq.). Illinois courts construe forfeiture clauses strictly and against the seller, and the seller bears the burden of proving the right to forfeiture clearly exists and that no injustice will result.

(c) Credit for Repairs on Default (765 ILCS 67/80). If Buyer defaults, Seller must credit Buyer with any amount Buyer spent to repair pre-existing defects in the Property.

8.4 Acceleration. Subject to the Act, Seller may declare the entire unpaid balance due upon an uncured default, as permitted by law and this Contract.

8.5 Account Statements (765 ILCS 67/30). Seller shall provide an account statement on Buyer's request, with one free statement every 12 months.

8.6 Cumulative Remedies; Attorney's Fees. Remedies are cumulative to the extent consistent with the Act. The prevailing party may recover reasonable attorney's fees and costs to the extent permitted by law.

9. PREPAYMENT — NO PENALTY (765 ILCS 67/60)

Buyer may prepay all or any part of the outstanding principal at any time with NO penalty, fee, or finance charge. Prepayments are applied to principal.

10. RISK OF LOSS

Risk of loss shall be on [Buyer / Seller] during the term. Insurance proceeds shall be applied as provided in Section 7.2 and 765 ILCS 67/35.

11. ASSIGNMENT

11.1 By Buyer. Buyer shall not assign this Contract or transfer possession without Seller's prior written consent, not unreasonably withheld. ☐ Consent not required.

11.2 By Seller. Seller may assign Seller's rights to payment, subject to Buyer's rights under this Contract and the Act.

12. DUE-ON-SALE / GARN–ST. GERMAIN WARNING

WARNING: If Seller has an existing mortgage on the Property, it likely contains a due-on-sale clause. Entering into this Contract may allow Seller's lender to accelerate the loan. The federal Garn–St. Germain Act (12 U.S.C. § 1701j-3) exempts certain transfers, but a contract for deed generally is not an exempt transfer. Both Parties should review Seller's loan documents and obtain lender consent where required.

13. DISCLOSURES; COOLING-OFF PERIOD

13.1 Cooling-Off Period (765 ILCS 67/70). Buyer may rescind this Contract within 3 business days of executing it. This Contract must be accompanied by the Attorney General Notice and a signed acknowledgment of receipt (765 ILCS 67/75). The Parties shall not be bound for 3 full business days after an unexecuted contract has been delivered.

13.2 Lead-Based Paint (Pre-1978 Housing). ☐ If the Property is covered target housing, Seller must provide the EPA/HUD lead-based paint disclosure and pamphlet, and the lead warning statement must be included (42 U.S.C. § 4852d; 24 C.F.R. Part 35; Illinois Lead Poisoning Prevention Act). ☐ Not applicable (not covered or exempt).

13.3 Other Required Acts (765 ILCS 67/15). This Contract is subject to the Residential Real Property Disclosure Act (765 ILCS 77), the Illinois Radon Awareness Act, the Lead Poisoning Prevention Act, and the High Risk Home Loan Act, as applicable. If the Residential Real Property Disclosure Act applies, Seller shall complete its prescribed report and deliver it to Buyer before the Parties sign this Contract under 765 ILCS 77/20 and 77/35; attach that report as Exhibit D.

For a residential sale not excluded by 420 ILCS 46/20, Seller shall also deliver the IEMA pamphlet Radon Testing Guidelines for Real Estate Transactions (or an IEMA-approved equivalent) and the completed statutory radon disclosure in Exhibit E before Buyer is obligated under this Contract. Seller shall give Buyer any radon-test records or reports of the dwelling showing elevated levels that Seller possesses. If the disclosure follows Buyer's offer, Seller shall complete it before accepting that offer and give Buyer an opportunity to review the information and possibly amend the offer. 420 ILCS 46/10(a)–(c). Attach the completed Exhibit E; record pamphlet delivery in it.

13.4 No Misrepresentations (765 ILCS 67/45). No oral or written misrepresentations are permitted.

14. GENERAL PROVISIONS

14.1 No Waiver (765 ILCS 67/50). No provision of the Act may be waived; any agreement contrary to the Act is void and unenforceable.

14.2 Arbitration (765 ILCS 67/55). Any mandatory arbitration provision is void and unenforceable if oppressive, unfair, unconscionable, or substantially in derogation of either party's rights.

14.3 Time of Essence. Time is of the essence as to all payment obligations (subject to the 90-day cure right).

14.4 Entire Agreement. This Contract, with its Exhibits, is the entire agreement.

14.5 Governing Law. This Contract is governed by the laws of the State of Illinois.

14.6 Severability. If any provision is held invalid, the remainder stays in effect.

14.7 Notices. Notices shall be in writing and delivered to the addresses in Section 1.

14.8 Enforcement (765 ILCS 67/85). A violation of the Act constitutes an unlawful practice under the Illinois Consumer Fraud and Deceptive Business Practices Act.

15. SIGNATURES AND NOTARIZED ACKNOWLEDGMENT

Signatures must be notarized. Until both Parties have a copy of the executed Contract signed by Buyer and Seller with the signatures notarized, either party may rescind (765 ILCS 67/10(b)).

IN WITNESS WHEREOF, the Parties have executed this Contract as of the date first written above.

SELLER:

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

Printed Name: [________________________________]

BUYER:

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

Printed Name: [________________________________]

NOTARY ACKNOWLEDGMENT

STATE OF ILLINOIS, COUNTY OF [________________]

On this [____] day of [____________], 20[____], before me personally appeared the above-named person(s), known or proven to me to be the person(s) who executed the foregoing Contract, and acknowledged that they executed the same.

Signature of Notary Public: [________________________________]

My commission expires: [__/__/____] [NOTARY SEAL]

EXHIBIT A — Legal Description

[____________________________________________________________]

EXHIBIT B — Permitted Encumbrances

[____________________________________________________________]

EXHIBIT C — Amortization Schedule

[____________________________________________________________]

EXHIBIT D — Illinois Residential Real Property Disclosure Report (if required)

Attach the completed statutory report prescribed by 765 ILCS 77/35. Date delivered to Buyer before signing: [DATE].

FEDERAL 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).

EXHIBIT E — DISCLOSURE OF INFORMATION ON RADON HAZARDS

(For Residential Real Property Sales or Purchases)

Complete this prescribed Illinois disclosure and give it, with the IEMA pamphlet Radon Testing Guidelines for Real Estate Transactions (or an IEMA-approved equivalent), to Buyer before Buyer is obligated, unless the transfer is excluded under 420 ILCS 46/20. The warning statement and acknowledgments below follow 420 ILCS 46/10(b).

Radon Warning Statement

Every buyer of any interest in residential real property is notified that the property may present exposure to dangerous levels of indoor radon gas that may place the occupants at risk of developing radon-induced lung cancer. Radon, a Class-A human carcinogen, is the leading cause of lung cancer in non-smokers and the second leading cause overall. The seller of any interest in residential real property is required to provide the buyer with any information on radon test results of the dwelling showing elevated levels of radon in the seller's possession.

The Illinois Emergency Management Agency (IEMA) strongly recommends ALL homebuyers have an indoor radon test performed prior to purchase or taking occupancy, and mitigated if elevated levels are found. Elevated radon concentrations can easily be reduced by a qualified, licensed radon mitigator.

Seller's Disclosure (initial each of the following which applies)

(a) [____] Elevated radon concentrations (above EPA or IEMA recommended Radon Action Level) are known to be present within the dwelling. Explain: [________________________________].

(b) [____] Seller has provided the purchaser with the most current records and reports pertaining to elevated radon concentrations within the dwelling.

(c) [____] Seller either has no knowledge of elevated radon concentrations in the dwelling or prior elevated radon concentrations have been mitigated or remediated.

(d) [____] Seller has no records or reports pertaining to elevated radon concentrations within the dwelling.

Purchaser's Acknowledgment (initial each of the following which applies)

(e) [____] Purchaser has received copies of all information listed above.

(f) [____] Purchaser has received the IEMA approved Radon Disclosure Pamphlet.

Agent's Acknowledgment (initial) (if applicable)

(g) [____] Agent has informed the seller of the seller's obligations under Illinois law.

Certification of Accuracy. The following parties have reviewed the information above and each party certifies, to the best of his or her knowledge, that the information he or she provided is true and accurate.

Seller: __________________________ Date: [__/__/____]

Seller: __________________________ Date: [__/__/____]

Purchaser: _______________________ Date: [__/__/____]

Purchaser: _______________________ Date: [__/__/____]

Agent: ___________________________ Date: [__/__/____]

Agent: ___________________________ Date: [__/__/____]

SOURCES AND REFERENCES

• 765 ILCS 67/ — Installment Sales Contract Act: https://law.justia.com/codes/illinois/chapter-765/act-765-ilcs-67/
• Illinois General Assembly — Installment Sales Contract Act: https://www.ilga.gov/Legislation/ILCS/Articles?ActID=3813&ChapterID=62
• 735 ILCS 5/15-1106; 5/15-1214 — Illinois Mortgage Foreclosure Law (installment-contract foreclosure)
• ISBA, "New law protects real estate purchasers who buy on contract": https://www.isba.org/ibj/2017/10/lawpulse/newlawprotectsrealestatepurchaserswhobuy
• 765 ILCS 77 — Residential Real Property Disclosure Act
• HUD/EPA Lead-Based Paint Disclosure Rule, 24 C.F.R. Part 35: https://www.epa.gov/lead
• Garn–St. Germain Act, 12 U.S.C. § 1701j-3: https://www.law.cornell.edu/uscode/text/12/1701j-3