Contract for Deed (Land Contract)

CONTRACT FOR DEED (INSTALLMENT LAND CONTRACT)

(Tennessee)

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 (Registration)
9. Default and Remedies (Tennessee Equity / Equitable-Mortgage Rule)
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 Tennessee has no installment-land-contract statute and that Tennessee courts may apply equitable principles, including treating this Contract as an equitable mortgage, where Buyer has acquired substantial equity (see Section 9).

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 day on which Tennessee-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 Tennessee 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.

"Register" / "Registration" – recording of an instrument with the Register of Deeds under Tenn. Code Ann. Title 66, Chapters 22–26.

"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, Tennessee, 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 Application of Payments. Payments are applied first to late charges and costs, then to accrued interest, then to principal.

4.6 Maximum Lawful Rate. No provision shall require interest exceeding the maximum permitted by Tennessee law (Tenn. Code Ann. Title 47, Chapter 14); 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 Amortization / Payoff Statement. Upon Buyer's written request, Seller shall provide a statement of the Unpaid Balance and amounts applied to principal and interest.

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 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.

6.3 Delivery at Payoff. Within [____] Business Days after Buyer pays all amounts due, Seller shall execute and deliver the Deed and register a release 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 homeowners' association requirements.

8. BUYER'S EQUITABLE INTEREST; RECORDING (REGISTRATION)

8.1 Registration. This Contract (or a Memorandum of Installment Land Contract in the form of Exhibit C) shall be registered with the Register of Deeds of [COUNTY] County, Tennessee, under Tenn. Code Ann. Title 66, Chapters 22–26. Under Tenn. Code Ann. § 66-26-103, an instrument not registered is void as to existing or subsequent creditors and bona fide purchasers without notice; registration provides constructive notice of Buyer's interest and helps protect Buyer's equitable title.

8.2 Recording Fees / Transfer Tax. Recording fees and any realty transfer tax (Tenn. Code Ann. § 67-4-409) shall be paid by [SELECT: Buyer / Seller].

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 (TENNESSEE EQUITY / EQUITABLE-MORTGAGE RULE)

9.1 Events of Default. Buyer is in default if Buyer (a) fails to pay any installment within [____] days after its due date; (b) fails to pay taxes or insurance; (c) commits waste; or (d) breaches any other material covenant and fails to cure within [____] days after written notice.

9.2 Notice and Right to Cure. Seller shall give Buyer written notice of default by certified mail, return receipt requested, specifying the default and a cure period of not less than [30] days. Buyer may cure by paying all past-due amounts plus late charges and Seller's reasonable costs.

9.3 TENNESSEE REMEDY — EQUITY GOVERNS; POSSIBLE EQUITABLE-MORTGAGE / FORECLOSURE. The Parties acknowledge:
a. Tennessee has no installment-land-contract statute; remedies are governed by general contract law and equity.
b. Tennessee courts may RELIEVE a defaulting Buyer against forfeiture and, where Buyer has acquired substantial Equity and has substantially performed, may treat this Contract as an equitable mortgage requiring Seller to enforce its security by foreclosure / judicial sale (with the surplus, if any, paid to Buyer) rather than by summary forfeiture and eviction.
c. Where Buyer's Equity is minimal, the default is willful, and little has been paid, a Tennessee court is more likely to enforce a contractual forfeiture and possession remedy.
d. A court will weigh Buyer's Equity, the length and willfulness of default, improvements made, and overall equities in determining the proper remedy.

9.4 Forfeiture (Use With Caution). [OPTIONAL] If permitted under Section 9.3(c), Seller may declare this Contract forfeited, terminate Buyer's rights, retain payments made as liquidated damages and reasonable rental value, and recover possession by an unlawful detainer action (Tenn. Code Ann. § 29-18-101 et seq.).

9.5 Cumulative Remedies; Attorneys' Fees. Remedies are cumulative to the extent permitted by law. The prevailing Party in any enforcement action is entitled to reasonable attorneys' fees and costs.

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.

10.2 Title Insurance. [SELECT: Seller / Buyer] shall provide, at [ITS] expense, an owner's title insurance commitment from [TITLE COMPANY] showing title vested in Seller as of the Effective Date, 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 or deed of trust, 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 (Pre-1978 Housing). If the dwelling was built before 1978, federal law (42 U.S.C. § 4852d) requires Seller to disclose known lead-based paint and hazards, provide available records, deliver the EPA pamphlet "Protect Your Family From Lead in Your Home," and allow Buyer a 10-day inspection opportunity. See Exhibit D. ☐ Not applicable (built 1978 or later).

13.2 Property Condition Disclosure. Seller has delivered the disclosure or disclaimer required by the Tennessee Residential Property Disclosure Act (Tenn. Code Ann. § 66-5-201 et seq.) describing known material defects, except where the transaction is exempt. ☐ Disclosure delivered ☐ Disclaimer ("as is") delivered ☐ Exempt

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

14. GENERAL PROVISIONS

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

14.2 Forum. Exclusive venue lies in the state courts in [COUNTY] County, Tennessee.

14.3 Notices. Notices shall be in writing and delivered by hand, certified mail (return receipt requested), or nationally recognized overnight courier to the addresses in Section 1.

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

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

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

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

14.8 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

STATE OF TENNESSEE
COUNTY OF [____________]

Personally appeared before me, the undersigned, a Notary Public in and for said County and State, the within-named [NAME(S)], with whom I am personally acquainted (or proved to me on the basis of satisfactory evidence), and who acknowledged that [he/she/they] executed the foregoing instrument for the purposes therein contained.

Witness my hand and official seal this [____] day of [MONTH], [YEAR].

________________________________________
Notary Public, State of Tennessee
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 registration)
• Exhibit D – Lead-Based Paint Disclosure (pre-1978 housing)
• Exhibit E – Tennessee Residential Property Disclosure (or disclaimer)
• Schedule 1 – Amortization Schedule

Sources and References

• Tenn. Code Ann. § 66-26-103 (unregistered instruments void as to creditors/BFPs) — https://law.justia.com/codes/tennessee/title-66/chapter-26/
• Tenn. Code Ann. § 66-7-101 (writing/registration for interests over three years) — https://codes.findlaw.com/tn/title-66-property/tn-code-sect-66-7-101/
• Tennessee Residential Property Disclosure Act, Tenn. Code Ann. § 66-5-201 et seq. — https://law.justia.com/codes/tennessee/title-66/chapter-5/part-2/
• Tennessee unlawful detainer, Tenn. Code Ann. § 29-18-101 et seq. — https://law.justia.com/codes/tennessee/title-29/chapter-18/
• HB 437 / SB 317 (2021, NOT enacted; installment land contract regulation) — https://www.capitol.tn.gov/Bills/112/Bill/HB0437.pdf
• 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