Contract for Deed (Land Contract)

CONTRACT FOR DEED (LAND CONTRACT)

(NEW YORK – INSTALLMENT LAND CONTRACT / SELLER FINANCING)

IMPORTANT NEW YORK NOTICE. A Purchaser (vendee) under this Contract acquires equitable title to the Property. Under New York law, including Bean v. Walker, 95 A.D.2d 70 (4th Dep't 1983), where a Purchaser has acquired substantial equity, the Seller (vendor) may not recover the Property by a simple ejectment action that forfeits that equity. Instead, the Seller must generally proceed by foreclosure of the Purchaser's equitable interest (a judicial foreclosure-type proceeding) or by an action at law for the purchase price, with the Purchaser entitled to any surplus from a sale. This document must be reviewed by New York counsel before use.

TABLE OF CONTENTS

1. Parties and Recitals
2. Definitions
3. Property and Legal Description
4. Purchase Price, Down Payment, and Installment Terms
5. Title; Deed Held and Escrow
6. Possession
7. Taxes, Insurance, Maintenance, and Utilities
8. Default and Remedies (New York Foreclosure of Vendee's Equity)
9. Prepayment
10. Recording
11. Risk of Loss
12. Assignment; Due-on-Sale (Garn–St. Germain)
13. Representations, Warranties, and Disclosures
14. General Provisions
15. Execution, Acknowledgment, and Notary
16. Exhibits and Schedules
17. Sources and References

1. PARTIES AND RECITALS

1.1 Parties. This Contract for Deed (the "Contract") is made effective as of [__/__/____] (the "Effective Date") by and between [SELLER LEGAL NAME], a [INDIVIDUAL/ENTITY TYPE], of [SELLER ADDRESS] ("Seller" or "Vendor"), and [PURCHASER LEGAL NAME], a [INDIVIDUAL/ENTITY TYPE], of [PURCHASER ADDRESS] ("Purchaser" or "Vendee"). Seller and Purchaser are each a "Party" and collectively the "Parties."

1.2 Recitals.
A. Seller is the owner of fee-simple title to the real property described in Section 3 (the "Property").
B. Seller has agreed to sell, and Purchaser has agreed to buy, the Property on the installment terms set forth herein, with Seller retaining legal title as security until the Purchase Price is paid in full.
C. Purchaser shall receive possession and equitable title upon execution, and Seller shall convey legal title by deed upon full performance.

2. DEFINITIONS

"Contract Balance" – the unpaid principal portion of the Purchase Price outstanding at any time.

"Equitable Title" – the ownership interest the Purchaser acquires upon execution of this Contract, with legal title retained by Seller as security.

"Escrow Agent" – [ESCROW/TITLE/ATTORNEY NAME AND ADDRESS], or a successor agreed in writing.

"Event of Default" – any event described in Section 8.1.

"Installment Payment" – each periodic payment of principal and interest under Section 4.

"Deed" – the bargain-and-sale or warranty deed described in Section 5, to be delivered upon full payment.

3. PROPERTY AND LEGAL DESCRIPTION

3.1 Property. Seller agrees to sell and Purchaser agrees to buy the real property located in [COUNTY] County, New York, commonly known as [STREET ADDRESS, CITY, NY ZIP], together with all improvements, fixtures, easements, and appurtenances.

3.2 Legal Description (Schedule A). The Property is legally described as:

[________________________________________________________________
________________________________________________________________]

3.3 Section/Block/Lot. S-B-L: [________________________________].

4. PURCHASE PRICE, DOWN PAYMENT, AND INSTALLMENT TERMS

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

4.2 Down Payment. Purchaser shall pay a down payment of $[____________] on or before the Effective Date, receipt of which Seller acknowledges.

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

4.4 Interest Rate. The financed balance bears interest at [____]% per annum.

4.5 Installment Schedule.

4.6 Application of Payments. Payments apply first to late charges, then accrued interest, then principal, unless otherwise required by law.

4.7 Late Charge. A late charge of $[____] or [____]% of the overdue payment applies to payments more than [____] days late.

4.8 Place of Payment. Payments are made to Seller at [ADDRESS] or to the Escrow Agent as designated.

5. TITLE; DEED HELD AND ESCROW

5.1 Retention of Legal Title. Seller retains legal title to the Property as security until the Purchase Price and all other sums due are paid in full.

5.2 Deed Held in Escrow. Concurrently with execution, Seller shall deposit with the Escrow Agent a duly executed and acknowledged [bargain-and-sale deed with covenants / warranty deed] conveying the Property to Purchaser, to be delivered upon full payment and performance.

5.3 Title Evidence. Seller shall furnish, at [Seller's/Purchaser's] expense, a title insurance commitment showing marketable title subject only to Permitted Exceptions listed on Schedule 1.

5.4 Conveyance on Payoff. Upon full payment, Seller shall deliver and record the Deed, conveying marketable title free of liens except Permitted Exceptions and matters created by Purchaser.

6. POSSESSION

6.1 Delivery of Possession. Purchaser is entitled to possession of the Property as of [__/__/____].

6.2 Equitable Title. Purchaser holds equitable title and all incidents of ownership except legal title, subject to this Contract; Seller holds legal title in trust as security, subject to Seller's equitable lien for the Purchase Price.

7. TAXES, INSURANCE, MAINTENANCE, AND UTILITIES

7.1 Taxes and Assessments. Purchaser shall pay, before delinquency, all real property taxes, assessments, and water rates levied on the Property from the Effective Date forward, and shall provide proof of payment to Seller on request.

7.2 Insurance. Purchaser shall maintain hazard insurance on the improvements for not less than $[____________], naming Seller as an additional insured / loss payee as its interest appears.

7.3 Maintenance. Purchaser shall keep the Property in good repair, commit no waste, and comply with all applicable laws, ordinances, and recorded restrictions.

7.4 Utilities. Purchaser shall pay all utilities and service charges from the date of possession.

8. DEFAULT AND REMEDIES (NEW YORK FORECLOSURE OF VENDEE'S EQUITY)

8.1 Events of Default. Each of the following is an Event of Default: (a) failure to make any Installment Payment when due; (b) failure to pay taxes or maintain insurance; (c) commission of waste; (d) unauthorized transfer in violation of Section 12; or (e) breach of any other material covenant.

8.2 Notice and Right to Cure. Before exercising any remedy, Seller shall deliver written notice of default specifying the default and the cure required. Purchaser shall have [thirty (30)] days after delivery of notice to cure.

8.3 Seller's Remedies on Uncured Default. If the default is not cured, Seller may, subject to New York law:

(a) Foreclosure of Purchaser's Equitable Interest. Where the Purchaser has acquired equity in the Property, Seller's remedy is to foreclose the Purchaser's equitable title through a judicial proceeding (treated like a mortgage foreclosure), with a court-supervised sale, application of proceeds to the Contract Balance and costs, and payment of any surplus to Purchaser. Under Bean v. Walker, 95 A.D.2d 70, the Seller may not simply eject the Purchaser and forfeit a substantial equity.

(b) Action for the Purchase Price. Seller may bring an action at law to recover the unpaid Purchase Price.

(c) Forfeiture (Limited). A contractual forfeiture/retention-of-payments provision may be enforceable only where the Purchaser has little or no equity such that retention is not an unenforceable penalty; otherwise New York equity will require foreclosure. Seller shall not rely on forfeiture where the Purchaser has substantial equity.

(d) Other Relief. Seller may pursue any other remedy available at law or in equity.

8.4 Anti-Penalty / Equity Protection. The Parties acknowledge that New York courts will not enforce a forfeiture that operates as a penalty against a Purchaser who has accumulated substantial equity, and any sums retained must bear a reasonable relationship to actual damages.

8.5 Attorney Fees. The prevailing Party in any enforcement action is entitled to reasonable attorney fees and costs to the extent permitted by law.

9. PREPAYMENT

Purchaser may prepay all or part of the Contract Balance at any time without penalty. Partial prepayments apply to principal and do not postpone scheduled payments unless Seller agrees in writing.

10. RECORDING

10.1 Recording of Executory Contract. This Contract (or a memorandum of it) may be recorded in the office of the County Clerk (or City Register) of [COUNTY] County, New York, pursuant to N.Y. Real Prop. Law § 294, which authorizes recording of an executory contract for the sale of real property, or a memorandum stating the parties, the time fixed for conveyance of title, a description of the property, and (if applicable) that the Purchaser is entitled to possession. An unrecorded executory contract is void against a later good-faith purchaser whose conveyance is first recorded (§ 294(3)).

10.2 Recording-Tax Note. Under N.Y. Tax Law § 250, an installment contract under which the Purchaser is entitled to possession is deemed a mortgage for mortgage-recording-tax purposes; the Parties should confirm any applicable recording tax with counsel and the recording office.

10.3 Who Records / Costs. [Seller/Purchaser] shall record this Contract (or memorandum) within [____] days of the Effective Date and pay recording fees and any tax.

11. RISK OF LOSS

Risk of loss is allocated under the Uniform Vendor and Purchaser Risk Act, N.Y. Gen. Oblig. Law § 5-1311. As the Purchaser is entitled to possession and equitable title, the Parties agree risk of loss passes to Purchaser upon possession; insurance proceeds shall be applied to restoration or to the Contract Balance as the Parties' interests appear.

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

12.1 Assignment by Purchaser. Purchaser shall not assign this Contract or transfer any interest in the Property without Seller's prior written consent, which [shall/shall not] be unreasonably withheld.

12.2 Underlying Financing; Due-on-Sale. If the Property is encumbered by a prior mortgage containing a due-on-sale clause, this Contract may trigger acceleration. The federal Garn–St. Germain Depository Institutions Act, 12 U.S.C. § 1701j-3, preempts most state restrictions on enforcement and contains limited exemptions. Seller represents the status of any underlying loan on Schedule 2. Confirm whether this transaction triggers acceleration before closing.

13. REPRESENTATIONS, WARRANTIES, AND DISCLOSURES

13.1 Seller's Title. Seller represents Seller holds marketable fee-simple title subject only to Permitted Exceptions.

13.2 Lead-Based Paint Disclosure (Pre-1978). If the dwelling was built before 1978, Seller shall provide the federal lead-based paint disclosure and the EPA pamphlet "Protect Your Family From Lead in Your Home," and afford Purchaser the opportunity to conduct a lead inspection, as required by 42 U.S.C. § 4852d and 24 C.F.R. Part 35 / 40 C.F.R. Part 745. (Schedule 3.)

13.3 Property Condition Disclosure. Seller shall deliver a Property Condition Disclosure Statement consistent with N.Y. Real Prop. Law Article 14 (or, where applicable, pay any statutory credit in lieu thereof). (Schedule 4.)

13.4 Consumer-Protection Guidance.

• Purchaser does not receive legal title until the Purchase Price is paid in full.
• Record this Contract (or a memorandum) promptly under RPL § 294 to protect your equitable interest.
• Under Bean v. Walker, if you build substantial equity, the Seller generally must foreclose (not simply evict) to recover the Property, and you may be entitled to any surplus from a sale.
• Verify whether the Property is subject to a prior mortgage that could be foreclosed even if you make all payments.
• Both Parties are strongly encouraged to obtain independent legal counsel and title insurance.

14. GENERAL PROVISIONS

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

14.2 Forum. The Supreme Court of the State of New York in the county where the Property is located has jurisdiction.

14.3 Time of Essence. Time is of the essence.

14.4 Notices. Notices must be in writing and delivered personally, by certified mail (return receipt requested), or by nationally recognized overnight courier to the addresses above.

14.5 Entire Agreement; Amendments. This Contract is the entire agreement and may be amended only in a signed writing.

14.6 Severability. Invalid provisions shall be reformed to the minimum extent necessary; the remainder remains in effect.

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

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

15. EXECUTION, ACKNOWLEDGMENT, AND NOTARY

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

SELLER

____________________________________
[SELLER LEGAL NAME]
Date: [__/__/____]

PURCHASER

____________________________________
[PURCHASER LEGAL NAME]
Date: [__/__/____]

NOTARY ACKNOWLEDGMENT (New York Form)

State of New York )
County of __________ ) ss.

On the [____] day of [__________], in the year [____], before me, the undersigned, personally appeared [NAME(S)], personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies).

____________________________________
Notary Public
My Commission Expires: [__/__/____]

16. EXHIBITS AND SCHEDULES

Schedule 1 – Permitted Exceptions / Title Matters
Schedule 2 – Underlying Financing Disclosure
Schedule 3 – Lead-Based Paint Disclosure (pre-1978 dwellings)
Schedule 4 – New York Property Condition Disclosure Statement
Schedule 5 – Memorandum of Contract (for recording under RPL § 294)

17. SOURCES AND REFERENCES

• N.Y. Real Prop. Law § 294 (recording executory contracts): https://www.nysenate.gov/legislation/laws/RPP/294
• N.Y. Tax Law § 250 (installment contracts deemed mortgages for recording tax)
• N.Y. Gen. Oblig. Law § 5-1311 (Uniform Vendor and Purchaser Risk Act)
• N.Y. Real Prop. Acts. Law (RPAPL) Article 13 (foreclosure)
• Bean v. Walker, 95 A.D.2d 70, 464 N.Y.S.2d 895 (4th Dep't 1983): https://www.casemine.com/judgement/us/59149001add7b0493456f1e9
• Garn–St. Germain Depository Institutions Act, 12 U.S.C. § 1701j-3
• Residential Lead-Based Paint Hazard Reduction Act, 42 U.S.C. § 4852d

END OF DOCUMENT