What does an installment contract (land contract) for the sale of estate not give the buyer?

An installment contract, also known as a land contract, is a type of agreement used in real estate transactions, particularly when a buyer does not immediately obtain full ownership of the property. Under this type of contract, the buyer makes regular payments to the seller over time, and in exchange, the buyer receives possession of the property.

However, what distinguishes an installment contract is that the buyer does not receive legal title to the property until the contract is fully paid off. Instead, the buyer acquires an equitable interest in the property, which gives them certain rights, such as the right to occupy and use the property. The seller typically retains legal title until all payments are made, which protects them in case of default by the buyer.

The notion that the buyer has an equitable interest acknowledges their rights during the duration of the contract, including the ability to improve the property and potentially lease it, subject to the terms of the contract. However, the key aspect is that they do not hold legal title during the payment period, which differentiates this agreement from a traditional outright sale where the buyer would own the property outright immediately after closing. Thus, the buyer’s lack of legal title is a fundamental characteristic of an installment contract.