Yes, provided a buyer is satisfied with the contract and the title. A land contract produces monthly payments, and a block of them can be sold while you keep the rest. Pricing works as it does on a mortgage note. The paperwork differs, because under a land contract the title to the property is still in your name.
Where a land contract parts from a mortgage note
A land contract, also called a contract for deed or an installment sale contract, is an agreement under which the buyer of a property pays you over time and you keep the legal title until they have paid in full. With a mortgage or deed of trust, the borrower gets the deed at the start and you hold a lien.
That difference shapes how a partial purchase is documented. On a mortgage note, the partial buyer takes an assignment of the note and the lien. On a land contract, the partial buyer takes an assignment of your interest in the contract, and may also ask for the title to be transferred to them or placed with a neutral party for as long as the partial runs.
The title during the partial, and getting it back
If the title moves while the buyer collects their payments, your agreement has to say exactly how it returns to you. Put these to the buyer before you sign:
- Does the title move to the buyer, stay with me or go to a third party during the partial?
- What document returns the contract and the title to me at the end, and is it signed in advance?
- Who records it, and who pays the recording costs?
- If the payer finishes paying early, who signs the deed to the payer?
Practice varies by state and by buyer, and moving title can have tax and recording consequences of its own. On a mortgage note, getting the note back after a partial means reassigning the note and the lien, and a land contract adds the title to that.
How the price is reached
The method is the one used for any partial. The buyer decides the return they want on their money and works out what they can pay today for the payments you are offering. Nearer payments are worth more than distant ones, so selling the next few years costs you less than selling the whole land contract.
That return is where land contracts can differ. A buyer who sees more risk in a land contract than in a mortgage note will ask for a higher one, while a buyer who specializes in them may not, and that is one reason offers on the same contract can sit far apart. To find out where yours falls, send us the contract details and say whether the contract is recorded.
What a buyer checks
Recording comes first. A contract, or a short memorandum of it, filed in the county records puts the payer’s interest in the property on public view, and a buyer will have more questions about one that was never filed. Because the title is in your name, the buyer also searches for liens or judgments against you as well as against the payer. If you still owe a lender on the property, they need to know how that underlying loan is being paid. They will ask who pays the property taxes and insurance and for proof that both are current. And they will read the payment record as they would on any note, since a run of on-time payments supports a better price.
If the payer stops paying
The remedy on a land contract depends on the state, and the choice is broadly between foreclosure and forfeiture. In some states, the seller can end the contract and take the property back through forfeiture. In others, a court treats the contract much like a mortgage and a foreclosure is required.
Your partial agreement should say who decides which remedy to use during the partial, who pays for it, and what happens to your share of the contract if the property is taken back.
Who should read the documents
Both the title question and the default question turn on state law, so have an attorney or a title company in the property’s state look at the partial agreement and the return documents before you commit. Take them the recorded contract or memorandum as well, because whatever returns the title to you has to match what is on the county record.
Related questions
Do I have to transfer the property title to the partial buyer?
A buyer may ask for the title to be transferred to them or held by a third party during the partial, and practice varies. Have an attorney or title company in the property's state review how it returns to you.
Is a partial on a land contract priced lower than on a mortgage note?
It can be. Some buyers apply a higher yield to land contracts and others specialize in them. Comparing more than one offer shows you where your contract sits.
Does my land contract need to be recorded to sell a partial?
Buyers generally prefer a recorded contract or memorandum, because it puts the payer's interest on the public record. An unrecorded contract may still be sold, but expect more questions and a narrower set of buyers.