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. The Parties acknowledge that if the Property is a dwelling located in a city of the first class (Philadelphia) or a county of the second class (Allegheny) and Buyer must make six or more installment payments before conveyance, this Contract is subject to the Pennsylvania Installment Land Contract Law, 68 P.S. § 901 et seq., and Sections 3–9 of that Act are deemed incorporated herein (68 P.S. § 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, no more often than once every six months, Seller shall inform Buyer in writing of the current unpaid balance, furnish an itemization of all components of installment payments, and make available tax and insurance receipts for inspection, as required for covered contracts under 68 P.S. § 907.

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 Implied Covenant of Marketable Title (68 P.S. § 907). For covered contracts, Seller impliedly covenants that title shall be good and marketable during the entire term of the Contract (subject to liens dischargeable from the unpaid balance). Seller shall not require settlement until the principal balance has been reduced to not more than 75% of the original principal, except as permitted by 68 P.S. § 907.

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 record a satisfaction of this Contract 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 shall cause this Contract (or a Memorandum of Installment Land Contract in the form of Exhibit C) to be recorded with the Recorder of Deeds of [COUNTY] County, Pennsylvania, pursuant to 21 P.S. § 351, to provide constructive notice of Buyer's interest and protect priority against subsequent purchasers and lienholders.

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 LIMITED (68 P.S. § 905). For a covered contract, on default in payment of any installment, assessment, or sum for repairs, Seller's remedies are LIMITED to either: (a) termination of the Contract under Section 9.2/§ 904; or (b) an action to recover the installment, assessment, or repair expenditure. In an action for damages for breach, the unpaid balance of the purchase price shall NOT be considered an item of recoverable damages (§ 905(e)).

9.5 DEFAULTING PURCHASER'S RECOVERY (68 P.S. § 906). A purchaser who has voluntarily surrendered possession and who has paid on account of principal a sum in excess of 25% of the purchase price may bring an action to recover that portion in excess of 25%, less the seller's actual damages; the portion retained by Seller is liquidated damages and not a penalty. Such action must be instituted within one year from the date of default.

9.6 Property Outside Philadelphia/Allegheny. If the Property is NOT a dwelling within a city of the first class or county of the second class, the Pennsylvania Installment Land Contract Law does NOT apply and general Pennsylvania contract and equity law governs, including possible treatment of the Contract as an equitable mortgage and recovery of possession by ejectment.

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 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 Property Condition Disclosure. Seller has delivered the Seller's Property Disclosure Statement required by the Pennsylvania Real Estate Seller Disclosure Law (68 Pa. C.S. §§ 7301–7315), unless an exemption applies.

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 (for recording under 21 P.S. § 351)
• Exhibit D – Lead-Based Paint Disclosure (pre-1978 housing)
• Exhibit E – Pennsylvania Seller's Property Disclosure Statement
• Schedule 1 – Amortization Schedule

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; application — Philadelphia / Allegheny scope) — https://codes.findlaw.com/pa/title-68-ps-real-and-personal-property/pa-st-sect-68-903/
• 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/cfdocs/legis/LI/uconsCheck.cfm?txtType=HTM&yr=1925&sessInd=0&act=326
• Pennsylvania Real Estate Seller Disclosure Law, 68 Pa. C.S. §§ 7301–7314 — https://www.legis.state.pa.us/
• 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