In an installment land contract, what type of title did the seller retain until the loan is paid?

In an installment land contract, what type of title did the seller retain until the loan is paid?

• A. Legal
• B. Equitable
• C. Trust
• D. Fee simple

Answer: (A)

In a contract for deed, the seller holds the legal title to the property as security for the buyer’s performance. The buyer gains equitable title and possession, but the full ownership (legal title) isn’t transferred until all payments are made. This arrangement protects the seller if the buyer defaults, because the seller can retain or regain the property under the agreement. Once the buyer completes the payments, the seller delivers the deed and transfers legal title to the buyer.

In a contract for deed, the seller holds the legal title to the property as security for the buyer’s performance. The buyer gains equitable title and possession, but the full ownership (legal title) isn’t transferred until all payments are made. This arrangement protects the seller if the buyer defaults, because the seller can retain or regain the property under the agreement. Once the buyer completes the payments, the seller delivers the deed and transfers legal title to the buyer.