Contracts
What is a 'contract for deed' (installment sales contract) and what are the risks for buyers in Illinois?
AA lease-to-own contract that converts to a deed after 5 years automatically
BSeller financing where the seller retains legal title until full payment; buyers risk losing all equity if they miss payments, as remedies may be swift✓ Correct
CA deed prepared by a title company used instead of an attorney-prepared deed
DA standard purchase agreement where the deed is held in escrow
Explanation
In a contract for deed (installment sale contract), the seller retains legal title while the buyer has equitable title and makes installment payments. The buyer risks losing all equity—the seller can often terminate the contract and reclaim the property if the buyer defaults. Illinois has enacted protections for long-term contract for deed buyers who have built up substantial equity, requiring foreclosure-like proceedings rather than simple forfeiture for buyers who have paid a significant portion.
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