Contract for Deed (Land Contract) - Pennsylvania

CONTRACT FOR DEED (INSTALLMENT LAND CONTRACT)

(Pennsylvania)

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 (Pennsylvania Installment Land Contract Law)
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. If the Property is a dwelling in a city of the first class or county of the second class and Buyer must make six or more installment payments after execution and before conveyance, the Pennsylvania Installment Land Contract Law applies, subject to its terms and exceptions (68 P.S. §§ 903, 910).

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 legal holiday on which Pennsylvania-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: General 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 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], [COUNTY] County, Pennsylvania, 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 Allocation of Payments (68 P.S. § 908). In determining the portion of each installment applied to principal, there shall first be deducted all items authorized by this Contract (taxes, water and sewer rentals, interest on the unpaid balance, insurance premiums, repairs, and assessments), and the net balance shall be applied to principal.

4.6 Maximum Lawful Rate. No provision shall require interest exceeding the maximum permitted by Pennsylvania 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 Account Statements (68 P.S. § 907). Upon Buyer's written request at reasonable intervals, no more often than once every six months, Seller shall inform Buyer in writing of the current unpaid purchase-price balance, furnish a complete itemization of all components of installment payments, and make available tax and insurance receipts and, when Buyer is responsible for repairs, repair bills and receipts for inspection.

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

6.1 Retention of Legal Title. Seller retains legal title to the Property until Buyer has paid the Purchase Price and performed all obligations in full. Buyer has the contractual right to receive the Deed on performance and the right of possession stated in Section 7.1.

6.2 Implied Covenant of Marketable Title (68 P.S. § 907). For covered contracts, Seller impliedly covenants that title shall be good and marketable throughout the Contract term, subject to § 907(f). Seller shall not require settlement until payments reduce the principal balance to no more than 75% of the original principal, unless Seller takes Buyer's purchase-money mortgage for the entire principal then due or secures a third-party mortgage for that amount with a term of at least ten years, as § 907(a) provides.

6.3 Escrow of Deed (Optional). [SELECT ONE]
☐ Seller shall deposit an executed, recordable Deed with [ESCROW AGENT/TITLE COMPANY] 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.

6.4 Delivery at Payoff. Within [____] Business Days after Buyer pays all amounts due, Seller shall execute and deliver the Deed and, if a memorandum or this Contract was recorded, execute a recordable release 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 common interest community requirements.

8. BUYER'S EQUITABLE INTEREST; RECORDING

8.1 Recording (21 P.S. § 351). Seller and Buyer shall acknowledge and record this Contract with the Recorder of Deeds of [COUNTY] County, Pennsylvania. If the Recorder accepts a memorandum that adequately states the Parties' interests, the Parties may record that memorandum instead. Section 351 governs the effect of an unrecorded instrument against later bona fide purchasers, mortgagees, and judgment holders without notice.

8.2 Recording and Transfer Costs. Recording fees and any applicable realty transfer tax shall be paid by [SELECT: Buyer / Seller] as agreed.

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 (PENNSYLVANIA INSTALLMENT LAND CONTRACT LAW)

9.1 Events of Default. Buyer is in default if Buyer (a) fails to pay any installment when due; (b) fails to pay taxes or insurance; (c) fails to keep the premises in good repair; or (d) breaches any other material covenant.

9.2 NOTICE OF TERMINATION — CONDITION PRECEDENT (68 P.S. § 904). For a covered contract, before exercising any right to terminate on default, Seller shall, as a condition precedent, serve on Buyer a written Notice of Termination by personal service, registered mail, or certified mail to Buyer's last known address. The Notice shall specify the nature of the default and, for a repair default, contain a reasonably specific statement of the items in disrepair.

9.3 MINIMUM CURE PERIOD (68 P.S. § 904(c)). The date of termination specified in the Notice shall in NO case be:

• less than 30 days after service where the default is failure to make a payment when due; or
• less than 60 days after service where the default is failure to make repairs.
  Buyer may cure within the stated period by curing the specified default.

9.4 SELLER'S REMEDIES (68 P.S. § 905). For a covered contract, on default in payment of an installment, assessment for public improvements, or qualifying repair sum, Seller may terminate the Contract under § 904 or sue to recover the sums described in § 905(a)–(c). After termination, Seller may sue for damages for breach, recover possession as provided by law, or both, subject to § 905(d)–(e). Recoverable damages may include the losses specified in § 905(e), but the unpaid balance of the purchase price is not itself a recoverable damages item.

9.5 DEFAULTING PURCHASER'S RECOVERY (68 P.S. § 906). A Buyer who voluntarily surrenders possession and has paid more than 25% of the Purchase Price toward principal may bring an action under § 906 to recover the principal portion above 25% and qualifying assessments for public improvements paid by Buyer, without interest, less Seller's actual damages and qualifying expenditures. The principal portion retained by Seller is treated as liquidated damages under § 906(b). Buyer must bring the action within one year after default.

9.6 Contracts Outside the Act. If this Contract does not meet the definition or is excluded under § 903, the remedies in this Section apply only to the extent allowed by other applicable law. Seller shall give any notice and obtain any court order required by that law before recovering possession.

9.7 Attorneys' Fees. The prevailing Party in any enforcement action is entitled to reasonable attorneys' fees and costs to the extent permitted by law.

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. A title is deemed marketable even though subject to a lien dischargeable by payment of a definitely ascertainable sum not exceeding the unpaid balance (68 P.S. § 907(f)).

10.2 Title Insurance. [SELECT: Seller / Buyer] shall provide, at [ITS] expense, a title insurance commitment 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 Existing Loan; Due-on-Sale. If the Property is subject to an existing loan, a lender may have an option under the loan contract to accelerate after a transfer of the Property or an interest in it, subject to 12 U.S.C. § 1701j-3. Seller represents that [SELECT: there is no underlying loan / the lender has consented in writing / Buyer has received the loan terms and accepts the identified 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 Property Condition Disclosure. For a residential real estate transfer covered by the Real Estate Seller Disclosure Law, Seller has delivered a signed and dated property disclosure statement satisfying the State Real Estate Commission form requirements to Buyer before both Parties sign this Contract, as required by 68 Pa.C.S. §§ 7302–7305. ☐ Statement delivered on [__/__/____] ☐ A § 7302 exception applies: [DESCRIBE].

13.3 Inspection. Buyer [SELECT: has inspected / has [____] days to inspect] the Property, including any radon testing, and accepts it subject to such inspection.

14. GENERAL PROVISIONS

14.1 Governing Law. This Contract is governed by the laws of the Commonwealth of Pennsylvania.

14.2 Forum. Exclusive venue lies in the Court of Common Pleas of [COUNTY] County, Pennsylvania.

14.3 Notices. Notices shall be in writing and delivered by hand, registered or certified mail (return receipt requested), or nationally recognized overnight courier to the addresses in Section 1, and as required by 68 P.S. § 904 for any notice of termination.

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

14.5 Statutory Incorporation (68 P.S. § 910). For covered contracts, Sections 3, 4, 5, 6, 7, 8, and 9 of the Installment Land Contract Law are deemed part of this Contract notwithstanding any inconsistent provision.

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

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

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

14.9 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

COMMONWEALTH OF PENNSYLVANIA
COUNTY OF [____________]

On this [____] day of [MONTH], [YEAR], before me, the undersigned officer, 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 they executed the same for the purposes therein contained.

In witness whereof, I hereunto set my hand and official seal.

________________________________________
Notary Public, Commonwealth of Pennsylvania
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 (if used and accepted for recording)
• Exhibit D – Lead-Based Paint Disclosure (pre-1978 housing)
• Exhibit E – Pennsylvania Seller's Property Disclosure Statement
• 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

• Installment Land Contract Law, Act of June 8, 1965, P.L. 115, No. 81 (full text) — https://www.legis.state.pa.us/WU01/LI/LI/US/PDF/1965/0/0081..PDF
• 68 P.S. § 903 (definitions and application) — https://www.legis.state.pa.us/WU01/LI/LI/US/PDF/1965/0/0081..PDF
• 68 P.S. § 904 (notice to terminate; 30/60-day minimums) — https://www.legis.state.pa.us/WU01/LI/LI/US/PDF/1965/0/0081..PDF
• 68 P.S. § 905 (seller's remedies; unpaid balance not recoverable) — https://www.legis.state.pa.us/WU01/LI/LI/US/PDF/1965/0/0081..PDF
• 68 P.S. § 906 (purchaser's recovery of principal over 25%) — https://www.legis.state.pa.us/WU01/LI/LI/US/PDF/1965/0/0081..PDF
• 21 P.S. § 351 (recording of conveyances) — https://www.legis.state.pa.us/WU01/LI/LI/US/PDF/1925/0/0327..PDF
• Real Estate Seller Disclosure Law, 68 Pa.C.S. §§ 7302–7305 — https://www.legis.state.pa.us/WU01/LI/LI/CT/HTM/68/00.073.003.000..HTM
• Garn–St. Germain Act, 12 U.S.C. § 1701j-3 — https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1701j-3&num=0&edition=prelim
• Lead-Based Paint, 42 U.S.C. § 4852d — https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section4852d&num=0&edition=prelim