Contract for Deed and Land Contract Laws by State (2026)

What a contract for deed is, in the words of the statutes

Every state that regulates these contracts defines them the same way in substance: the buyer moves in and pays in installments, and the seller keeps title as security. Ohio's definition is typical: an agreement “under which the vendor agrees to convey title in real property located in this state to the vendee and the vendee agrees to pay the purchase price in installment payments, while the vendor retains title to the property as security for the vendee's obligation” (Ohio Revised Code 5313.01(A)). Washington calls it a real estate contract, “any written agreement for the sale of real property in which legal title to the property is retained by the seller as security for payment of the purchase price” (RCW 61.30.010(1)). Louisiana's bond for deed is a sale “in which the seller after payment of a stipulated sum agrees to deliver title to the buyer” (Louisiana Revised Statutes 9:2941).

The names change; the length test often does too. Ohio and California cover contracts that do not have to be completed within one year (Ohio Revised Code 5313.01(A); California Civil Code 2985(a)), Illinois covers installments over at least one year (765 ILCS 67/5), and Texas excludes a contract that delivers the deed within 180 days (Texas Property Code 5.062(c)). Most of these statutes protect homes, not investment land: Ohio's chapter covers property with a dwelling, Texas covers the buyer's residence, and Illinois covers buildings with one to four units.

Contract for deed vs seller financing with a deed and mortgage

The difference is who holds title while the buyer pays. In seller financing with a deed, the buyer receives the deed at closing and gives the seller a mortgage or deed of trust, so a default leads to foreclosure under the state's mortgage rules. In a contract for deed, the seller still owns the house, and many contracts provide that a default ends the contract and the seller keeps the payments. Minnesota requires investor sellers to tell buyers this in bold: “A contract for deed is NOT a mortgage. Minnesota's foreclosure protections do NOT apply.” (Minnesota Statutes 559A.03, subd. 5). For the deed-and-mortgage route, the federal loan-originator rules and the tax side, see our guide to seller financing for real estate investors.

Some states close most of the gap by statute. A recorded Texas executory contract “shall be the same as a deed with a vendor's lien” (Texas Property Code 5.079(a)), Oklahoma deems contracts for deed with immediate possession to be mortgages subject to “the same rules of foreclosure” (Oklahoma Statutes Title 16, section 11A), and Washington lets the seller choose to foreclose the contract as a mortgage instead of forfeiting it (RCW 61.30.020(1)).

The 15-state table: cure periods, equity protection and recording

Contract for deed and land contract statutes, as of October 12, 2026 (official texts)

Source: official statute texts of each legislature, read October 12, 2026 (URLs in the CSV). The Ohio, Illinois, Michigan, Oregon and California pages refused connections from our network that day, so we read them through Internet Archive captures of the official pages dated between June 2024 and October 9, 2026; Michigan's capture states the compilation is complete through Public Act 2 of 2026. "Our reading" marks interpretation, not the statute's words.

States not in the table either have no general contract-for-deed statute we could open in official form, or rely mainly on court decisions. We did not include a state unless we read its statute text. If your state is missing, assume the contract's own terms and the state's case law control, and have a local real estate lawyer read it before you sign (our reading).

Texas: the most detailed rules, and the 40% / 48-payment line

Texas regulates executory contracts on a buyer's residence in more detail than any other state we read. The seller can rescind or forfeit only after notice and a 30-day chance to cure, and only if “the contract has not been recorded in the county in which the property is located” (Texas Property Code 5.064(4)). Once the buyer “has paid 40 percent or more of the amount due or the equivalent of 48 monthly payments,” or once the contract is recorded, forfeiture is off the table and the seller must sell through a trustee, with at least 60 days to cure (5.066(a)-(b)). If the sale brings in more than the balance, “the seller shall disburse the excess funds to the purchaser” (5.066(e)).

Source: Texas Property Code chapter 5, subchapter D, official text from the Texas Legislative Council, read October 12, 2026.

Two limits matter. Sections 5.066 and 5.068-5.080 do not apply if the buyer is related to the seller and waived them in writing (5.062(d)), and a lease with an option to buy is treated as an executory contract, with a shorter list of protections when the term is three years or less (5.062(a)(2), (f)).

Minnesota: 559.21 cancellation and the 2024 investor-seller law

Minnesota ends a contract for deed by notice, not in court. For contracts signed on or after August 1, 1985, the notice “must state that the contract will terminate 60 days” after service unless the buyer pays what is due, the costs of service, 2% of the amount in default and an attorney fee, which is $1,000 for contracts signed on or after August 1, 2024 (Minnesota Statutes 559.21, subd. 2a). The statutory notice warns, in capital letters, that otherwise “YOU WILL LOSE ALL THE MONEY YOU HAVE PAID ON THE CONTRACT” (subd. 3). A buyer can stop the clock only with a court order (559.211).

The 2024 law (Laws 2024, chapter 123, article 16) added chapter 559A for investor sellers of 1-4 unit homes. An investor seller is anyone selling residential property on contract except the listed exceptions, such as an owner who lived in the home for 12 continuous months, family sales, regulated banks and builders (559A.01, subd. 5).

Source: Minnesota Statutes 559.21, 559.211, 507.235 and chapter 559A, Office of the Revisor of Statutes, read October 12, 2026.

The mandatory disclosure puts the timeline at four months: “the seller can cancel the contract in only 120 days from the date you missed the payment” (559A.03, subd. 5), which matches the 30-day prior notice plus the 90-day notice (our arithmetic). Recording is also policed: contracts for deed must be recorded within four months (507.235, subd. 1), a buyer who fails to record faces a civil penalty of 2% of the contract debt (subd. 2), and a residential seller who neither recorded nor tried in good faith cannot terminate under 559.21 (559.21, subd. 4b). In 2026, chapter 80 added section 559.206, a court action for a domestic violence victim to end an abuser's joint interest in a contract for deed, effective July 1, 2026 for contracts entered into on or after that date.

Ohio and Illinois: required contract terms and the 20% rule

Ohio's chapter 5313 lists 16 terms every land installment contract must contain, from the interest rate “and the method of computing the rate” to a statement of encumbrances and a promise to deliver a general warranty deed (Ohio Revised Code 5313.02(A), our count). The vendor must record a copy within 20 days (5313.02(C)) and give the buyer a statement of principal, interest and balance at least once a year (5313.03). On default, forfeiture “may be enforced only after the expiration of thirty days from the date of the default” (5313.05). After that, the protection depends on what was paid: if the buyer “has paid in accordance with the terms of the contract for a period of five years or more from the date of the first payment or has paid toward the purchase price a total sum equal to or in excess of twenty per cent thereof,” the vendor can recover the home only by foreclosure and judicial sale (5313.07).

Illinois took a disclosure-heavy approach in the Installment Sales Contract Act, effective January 1, 2018 (765 ILCS 67/999). The official text shows the last amendment as P.A. 101-557, effective June 1, 2020; we found no 2021 change to the Act. The contract must disclose 28 items, including the price, the rate “expressed only as an annual percentage rate,” every balloon payment, prior-year taxes and an amortization schedule (Sec. 10(c), our count). The seller must record the contract or a memorandum within 10 business days (Sec. 20(a)), the buyer gets a 3-business-day cooling-off period that “cannot be waived” (Sec. 70, 75), prepayment penalties are banned (Sec. 60), and no action can start until “the expiration of 90 days from the date of the default” (Sec. 40). The catch is scope: a seller is covered only if it “enters into an installment sales contract more than 3 times during a 12-month period” (Sec. 5), so a one-off seller is outside the Act (our reading).

Federal rules: Regulation Z and the loan originator exclusions

There is no federal contract-for-deed statute, but federal lending rules can reach these contracts. Regulation Z defines a residential mortgage transaction to include a “purchase money security interest arising under an installment sales contract” in the buyer's principal dwelling (12 CFR 1026.2(a)(24)). Whether the seller must follow Truth in Lending depends on whether the seller is a creditor: a person regularly extends consumer credit only if it did so “more than 25 times (or more than 5 times for transactions secured by a dwelling) in the preceding calendar year” (12 CFR 1026.2(a)(17)(v)).

The loan originator rules have two seller exclusions. A person that “provides seller financing for the sale of three or fewer properties in any 12-month period” is not a loan originator if the financing is fully amortizing, the seller determines in good faith that the buyer can repay, and the rate is fixed or adjustable only after five or more years (12 CFR 1026.36(a)(4)). A natural person, estate or trust financing “only one property in any 12-month period” is excluded if there is no negative amortization and the same rate condition is met (12 CFR 1026.36(a)(5)). Whether a given land contract is “seller financing” under those paragraphs is a fact question for the seller's counsel (our reading); the seller financing page linked above covers the federal rules in more depth.

Who pays taxes and insurance on a contract for deed

The contract decides, but several statutes set defaults or force disclosure. In Ohio the contract must contain “a requirement that the vendee be responsible for the payment of taxes, assessments, and other charges against the property from the date of the contract, unless agreed to the contrary” (Ohio Revised Code 5313.02(A)(15)). In Illinois the default runs the other way: “In all circumstances not defined in the disclosure required by this subsection, the seller has the responsibility for paying real estate taxes and insurance” (765 ILCS 67/10(c)(8)). Texas requires the seller to hand over a tax certificate for each taxing unit and a copy of the insurance before signing (Texas Property Code 5.070). California requires a seller who collects tax and insurance money to “hold these amounts in trust” (California Civil Code 2985.4). This page does not cover the income tax side for the seller; see the seller financing guide.

What a buyer or seller can do with this

• Buyers: find your state's cure period and threshold today, before a payment is late. The difference between 30 days and one year, or between forfeiture and a foreclosure sale with surplus paid to you, is set by the statutes above, not by what the seller tells you.
• Buyers: make sure the contract is recorded. In Texas recording triggers the trustee-sale protection (5.066(a)); in Minnesota an unrecorded residential contract cannot be terminated by notice (559.21, subd. 4b); in Illinois and Maryland a late recording gives you a right to rescind (765 ILCS 67/20; Real Property 10-102(f)).
• Buyers: check the seller's own mortgage. Texas and Minnesota restrict selling on contract a house that has a mortgage (Texas Property Code 5.085; Minnesota Statutes 559A.04, subd. 1); in other states a seller's foreclosure can wipe out your interest (our reading).
• Buyers: plan the exit. Contracts with a balloon payment usually need a mortgage to pay off. Texas gives you a right to convert to a deed and deed of trust at any time (5.081), and Maryland lets you demand a deed and give a mortgage once 40% of the cash price is paid (Real Property 10-105).
• Sellers: count your contracts. Illinois coverage starts at more than 3 contracts in 12 months, Minnesota's investor rules apply unless you fit an exception, Texas penalties for missed annual statements are higher for sellers with two or more transactions in 12 months, and Regulation Z creditor status starts at more than 5 dwelling-secured credit extensions a year.
• Investors using a contract for deed in a 1031 exchange: under Rev. Proc. 2000-37 a contract for deed is one of the forms of qualified indicia of ownership an exchange accommodation titleholder can hold; see our reverse 1031 exchange guide.

FAQ

Sources, read and saved on October 12, 2026: Texas Property Code chapter 5, subchapter D (Texas Legislative Council); Minnesota Statutes 507.235, 559.21, 559.211 and chapter 559A, and Minnesota Laws 2026, chapter 80 (Office of the Revisor of Statutes); Ohio Revised Code chapter 5313; Illinois Installment Sales Contract Act, 765 ILCS 67; Michigan Compiled Laws 600.5726 and 600.5744; Iowa Code 2026 chapter 656; Arizona Revised Statutes 33-741 to 33-743; Revised Code of Washington chapter 61.30; Oregon Revised Statutes 93.905 to 93.945 (2025 edition); Oklahoma Statutes Title 16, section 11A; Maryland Code, Real Property 10-101 to 10-108; North Dakota Century Code chapter 32-18; Louisiana Revised Statutes 9:2941 to 9:2948; California Civil Code 2985, 2985.1, 2985.2, 2985.4 and 2985.51; Florida Statutes 697.01 (2026); 12 CFR 1026.2 and 1026.36 (eCFR). The Ohio, Illinois, Michigan, Oregon and California texts were read through Internet Archive captures of the official legislature pages because those servers refused our connection. Counts and the reading of each statute are ours. This is analysis of public documents, not investment, legal or tax advice.