Contracts
In Tennessee, a 'contract for deed' (installment land contract) may be risky for the buyer because:
AThe buyer pays too much in interest
BThe buyer does not receive legal title until the full purchase price is paid, leaving them vulnerable if the seller defaults on an existing mortgage✓ Correct
CThe buyer cannot resell the property
DThe buyer must pay all property taxes personally
Explanation
In a contract for deed, the seller retains legal title. If the seller has an existing mortgage and defaults, the buyer could lose the property despite making all installment payments.
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Key Terms to Know
Deed
A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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