Contract for Deed (Land Contract) - Indiana

CONTRACT FOR DEED (LAND CONTRACT)

State of Indiana — Installment Sale with Retained Legal Title

IMPORTANT — INDIANA FORECLOSURE RULE (Skendzel v. Marshall). Under Skendzel v. Marshall, 301 N.E.2d 641 (Ind. 1973), Indiana treats a land-contract seller's retained title as a security interest analogous to a mortgage lien. Where the buyer has acquired substantial equity, the seller generally must FORECLOSE the contract (with the buyer's right of redemption) rather than declare a forfeiture. Forfeiture is available only in limited circumstances — (1) an abandoning or absconding buyer, or (2) where the buyer has paid only a minimal amount and the seller's security is jeopardized. A forfeiture clause that strips a buyer of substantial paid-in equity is unenforceable as a penalty.

1. PARTIES

This Contract for Deed (also called a "Land Contract" or "Land Sale Contract," and referred to herein as this "Contract") is made on [__/__/____] by and between:

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

BUYER (Vendee): [________________________________], 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 real property located in the County of [________________], State of Indiana, commonly known as:

Street Address: [________________________________]

Parcel / Key No.: [________________________________]

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

[____________________________________________________________]

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

3. PURCHASE PRICE, DOWN PAYMENT, AND INSTALLMENT TERMS

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

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 Place of Payment. Payments shall be made to Seller at the address in Section 1 or to such escrow/collection agent as Seller designates in writing.

3.4 Interest Rate Compliance. The interest rate shall not exceed the maximum permitted under Indiana 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 in full and performed all obligations. Buyer holds equitable title and is entitled to possession. Under Indiana law, Seller's retained title functions as security for the unpaid price.

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.

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

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

5. RECORDING

5.1 Recording in Indiana. Under Ind. Code § 32-21-4-1, a "conveyance" includes a land contract or a memorandum of land contract, and must be recorded in the Recorder's office of the county where the land is located. A conveyance takes priority according to the time of its recording and is void as against a subsequent good-faith purchaser, lessee, or mortgagee whose instrument is recorded first.

5.2 Buyer Protection. ☐ Buyer SHOULD record this Contract (or a memorandum) promptly to protect Buyer's equitable interest against future liens, transfers, and judgments against Seller.

5.3 Sales Disclosure / Transfer. A Sales Disclosure Form may be required for transfers; confirm transfer-tax/recording-fee treatment with the county recorder/auditor.

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

7.1 Property Taxes. ☐ Buyer shall pay all real property taxes directly when due. ☐ Buyer shall pay taxes to Seller/escrow in installments.

7.2 Insurance. Buyer shall keep the Property insured against fire and casualty for not less than $[________________], naming Seller as additional insured / loss payee.

7.3 Maintenance. Buyer shall keep the Property in good repair, shall not commit waste, and shall comply with applicable laws and ordinances.

7.4 Utilities. Buyer shall pay all utility charges from the date of possession.

8. DEFAULT AND REMEDIES

8.1 Events of Default. Buyer is in default if Buyer (a) fails to make any payment when due beyond the grace period; (b) fails to pay taxes or insurance; (c) commits waste; (d) abandons the Property; or (e) breaches any other material term and fails to cure within [____] days after written notice.

8.2 Grace Period / Notice and Cure. Seller shall give Buyer written notice of default and a period of [____] days to cure by paying all past-due amounts plus late charges.

8.3 Seller's Remedies — Indiana Rule (Foreclosure Generally Required).

(a) Foreclosure With Right of Redemption (Substantial Equity). Under Skendzel v. Marshall, 301 N.E.2d 641 (Ind. 1973) and its progeny, where Buyer has paid a substantial portion of the Purchase Price (acquired substantial equity), Seller's remedy is to foreclose the Contract as if it were a mortgage (Ind. Code Art. 32-30), giving Buyer a right of redemption. On a foreclosure sale, Buyer is entitled to any surplus proceeds after the unpaid balance and costs are satisfied. An outright forfeiture of substantial equity is an unenforceable penalty.

(b) Forfeiture (Limited Circumstances). Forfeiture (terminating the Contract, recovering possession, and retaining payments) is available only where (1) Buyer has abandoned or absconded from the Property, or (2) Buyer has paid only a minimal amount and Seller's security interest has been jeopardized by Buyer's acts or omissions. Seller may pursue possession under Ind. Code § 32-30-3-5 in such cases.

(c) Action for the Price / Specific Performance. Seller may alternatively sue for the unpaid balance or for specific performance.

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

8.5 Buyer's Right to Reinstate / Redeem. Buyer may reinstate by curing within the grace period, or redeem by paying the full balance and Seller's reasonable costs at any time before a foreclosure sale is confirmed or the Contract is terminated.

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

9. PREPAYMENT

Buyer may prepay all or any part of the unpaid balance at any time ☐ without penalty / ☐ subject to: [________________________________]. 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 to restoration or to the unpaid balance as the Parties agree in writing.

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.

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

13.1 Seller Disclosures (Ind. Code § 32-21-1-15). For a residential land contract, Seller shall provide the disclosures required by Ind. Code § 32-21-1-15 (including, as applicable, the legal description, encumbrances and liens, the amount due, any taxes/assessments and insurance the Buyer must pay, and the rights and obligations of the Parties).

13.2 Property Condition (Ind. Code § 32-21-5). Seller shall provide the Indiana Residential Real Estate Sales Disclosure Form where applicable and shall disclose known material defects.

13.3 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). ☐ Not applicable (not covered or exempt).

13.4 Other Disclosures. [Flood zone / homeowners association / other: ________________________________].

14. GENERAL PROVISIONS

14.1 Time of Essence. Time is of the essence as to all payment obligations.

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

14.3 Governing Law. This Contract is governed by the laws of the State of Indiana.

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

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

14.6 Counterparts. This Contract may be executed in counterparts, including electronic signatures.

15. SIGNATURES AND ACKNOWLEDGMENT

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 INDIANA, 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: [________________________________]

Print Name: [________________________________]

My commission expires: [__/__/____] County of Residence: [________________] [NOTARY SEAL]

EXHIBIT A — Legal Description

[____________________________________________________________]

EXHIBIT B — Permitted Encumbrances

[____________________________________________________________]

SOURCES AND REFERENCES

• Skendzel v. Marshall, 301 N.E.2d 641 (Ind. 1973): https://law.justia.com/cases/indiana/supreme-court/1973/773s145-2-0.html
• Ind. Code § 32-21-4-1 — Conveyances and mortgages; recording; priority: https://law.justia.com/codes/indiana/title-32/article-21/chapter-4/section-32-21-4-1/
• Ind. Code § 32-21-1-15 — Land contract seller disclosures
• Ind. Code § 32-30-3-5 — Action for possession of real estate; Ind. Code Art. 32-30 — Foreclosure
• 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