The meaning of a contract for deed is to provide a purchaser for real property with the option of buying land without a mortgage lender. It offers a simpler and more economic method of purchasing real estate. The purchaser pays the seller monthly installments, with the deed delivered to the purchaser once all payments have been made. However, many grantors and grantees encounter an issue with delivery. What actually constitutes a proper delivery of a deed, from the grantor, to the grantee.  In terms of the basic requirements, a valid deed must be: contract for deed, contract for deed template, contract for deed meaning, contract for deed meaning

    1. In writing and signed by the grantor
    2. Identify the parties to the deed
    3. Contains words of conveyance
    4. Describe the property sufficiently
    5. Delivered and accepted

The Meaning of A Contract For Deed – Delivery, Acceptance & Closing

Delivery: A deed is delivered when the grantor “demonstrates a present intent to transfer the property”. To satisfy the “present intent” requirement,  words and actions of a party will determine whether present intent has been established. Most states follow the “presumed delivery” concept, which means the deed is recorded.  contract for 

Acceptance : Acceptance is will be presumed where a transfer is for value. If a person does not want to accept the deed, they have to disclaim the acceptance. contract for deed meaning

Closing:  After closing, the land sale contract merges into the deed. Subsequently, any liability will arise out of the deed rather than the contract, known as s the general doctrine of merger. It is significant because a real estate contract will merge into the deed when the land transaction is completed. And there will be no cause of action unless said prior agreement will have existed. So the grantee will  only be limited to the express covenants contained in the deed. All prior terms, covenants, or promises will be inapplicable, unless contained in the deed.

There are three kinds of deeds: contract for deed, contract for deed template

General Warranty DeedA General warranty deeds provides the greatest amount of title protection and contains present and future covenants. The grantor warrants title against all defects, even if the grantor did not cause the defects.

contract for deedSpecial Warranty DeedA special warranty deeds provides less protection than a general warranty deed. It contains present and future covenants. The grantor warrants against title defects, but only those caused by the grantor.

Quitclaim Deed A quitclaim deed provides no title protection. Quitclaim deeds provide the least amount of title protection. The grantor makes no warranties as to the health of the title. So, if grantor is conveying a quitclaim deed to the Grantee, once the delivery occurs, if there turns out to be defects in title, the grantee has no form of recovery against title defect. Even if the land sale contract contained those protections in place.

Thus, the meaning of a contract for deed is most important in the context of the doctrine of merger. And it is more important than a land sale contract in securing the parties’ rights. Because the terms in a land sale agreement will no longer be relevant once the deed has been delivered. The parties should always include pertinent terms in the contract for deed, particularly if they wish to enforce certain rights and obligations. Contract for deed meaning.

Comments (2)

  1. Jerry Kendo
    March 2, 2021

    Interesting.. what about promises made in the contract stage, before delivery of the deed?

    • admin
      March 2, 2021

      Thanks for your question Jerry. A property contract will merge into the deed once it’s delivered to the grantee. So just make sure that any promise or covenant that was reflected in the property contract, is also included in the deed.

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