Contract for Deed (Land Contract)

CONTRACT FOR DEED (INSTALLMENT LAND CONTRACT)

(Vermont)

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 (Vermont Foreclosure / Strict Foreclosure 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 Vermont has no installment-land-contract statute and that Vermont courts may treat this Contract as an equitable mortgage requiring foreclosure where Buyer has equity (see Section 9).

NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the Parties agree as follows:

2. DEFINITIONS

"Business Day" – any day other than Saturday, Sunday, or a legal holiday in Vermont.

"Closing" / "Final Closing" – delivery of the Deed upon payment in full of all amounts due under this Contract.

"Deed" – a [SELECT: Warranty Deed / Special (Limited) 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 Vermont 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], [TOWN/CITY], [COUNTY] County, Vermont, 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 Vermont law (9 V.S.A. ch. 4); 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.

5.4 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 (Recommended). [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 record 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 association requirements.

8. BUYER'S EQUITABLE INTEREST; RECORDING

8.1 Recording. This Contract (or a notice/memorandum of contract for the sale of real estate under 27 V.S.A. § 348 in the form of Exhibit C) shall be recorded in the land records of the Town of [TOWN], Vermont. Under 27 V.S.A. § 341, a deed or other conveyance of land is not effective against persons other than the grantor, the grantor's heirs, and persons with actual notice unless it is acknowledged and recorded. Recording provides constructive notice of and helps protect Buyer's equitable interest.

8.2 Recording Fees / Property Transfer Tax. Recording fees and any Vermont property transfer tax (32 V.S.A. § 9602) 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 (VERMONT FORECLOSURE / STRICT FORECLOSURE 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 VERMONT REMEDY — FORECLOSURE WHERE BUYER HAS EQUITY. The Parties acknowledge:
a. Vermont has no installment-land-contract statute; Vermont courts treat a land contract under which Buyer has acquired Equity as a security arrangement (equitable mortgage) and, consistent with Vermont's tradition of relieving against forfeiture, generally require Seller to FORECLOSE Buyer's interest rather than summarily declare a forfeiture and evict.
b. STRICT FORECLOSURE (12 V.S.A. § 4941). In an action for foreclosure, the court may issue a decree foreclosing the equity of redemption without a judicial sale only on a finding that there is no substantial value in the Property in excess of the debt (plus other liens and unpaid taxes); the court must include a summary of the evidence supporting that finding. If a decree of strict foreclosure issues, the redemption period is six (6) months from the decree unless the court orders a shorter time or the Parties agree to a shorter period.
c. JUDICIAL SALE. Where the Property has substantial value in excess of the debt, any party may request, or the court may order, a judicial foreclosure sale, with surplus proceeds (after the debt and costs) paid to Buyer.
d. OWNER-OCCUPIED DWELLING / FARMLAND. A mortgage or contract on a dwelling house and farmland owned by a natural person may not be foreclosed by the non-judicial power-of-sale process (12 V.S.A. § 4961).
e. Perfecting Title. After the redemption period expires without redemption, Seller must record a certified copy of the judgment and the certificate of nonredemption in the land records (12 V.S.A. § 4941(g)) to perfect title against subsequent parties.

9.4 Forfeiture (Use With Caution). [OPTIONAL] Where Buyer has paid little, has no meaningful Equity, and the default is willful, Seller may seek to enforce a contractual forfeiture and recover possession; however, the Parties acknowledge a Vermont court may relieve against forfeiture and require foreclosure where Buyer has Equity.

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, 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 records, deliver the EPA pamphlet, and allow a 10-day inspection opportunity. See Exhibit D. ☐ Not applicable (built 1978 or later).

13.2 Property Condition Disclosure. Seller has delivered a Seller's Property Information Report / disclosure describing known material defects [SELECT: per customary Vermont practice / per the parties' agreement].

13.3 Inspection. Buyer [SELECT: has inspected / has [____] days to inspect] the Property, including any water-supply/wastewater (well/septic) and 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 State of Vermont.

14.2 Forum. Exclusive venue lies in the Vermont Superior Court, [COUNTY] Unit.

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 Vermont foreclosure 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 VERMONT
COUNTY OF [____________]

On this [____] day of [MONTH], [YEAR], personally appeared [NAME(S)], and acknowledged this instrument, by [him/her/them] sealed and subscribed, to be [his/her/their] free act and deed.

Before me,
________________________________________
Notary Public, State of Vermont
My Commission Expires: ___________
[SEAL]

16. EXHIBITS AND SCHEDULES

• Exhibit A – Legal Description of the Property
• Exhibit B – Permitted Exceptions
• Exhibit C – Notice / Memorandum of Contract for Sale of Real Estate (27 V.S.A. § 348)
• Exhibit D – Lead-Based Paint Disclosure (pre-1978 housing)
• Exhibit E – Seller's Property Information Report / Disclosure
• Schedule 1 – Amortization Schedule

Sources and References

• 27 V.S.A. § 341 (recording; effect against third parties) — https://legislature.vermont.gov/statutes/section/27/005/00341
• 27 V.S.A. § 348 (notice of contract for sale of real estate) — https://legislature.vermont.gov/statutes/section/27/005/00348
• 12 V.S.A. § 4941 (strict foreclosure; six-month redemption) — https://legislature.vermont.gov/statutes/section/12/172/04941
• 12 V.S.A. § 4961 (limits on non-judicial sale; owner-occupied dwelling/farmland) — https://legislature.vermont.gov/statutes/section/12/172/04961
• Vermont Consumer Protection Act, 9 V.S.A. § 2451 et seq. — https://legislature.vermont.gov/statutes/chapter/09/063
• 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