Land Contracts in California Real Estate

A land contract — also called an Installment Land Contract (ILC) or Agreement for Deed — is an installment purchase where the seller finances the sale. The buyer makes a down payment and the seller acts as the bank, financing the balance at a negotiated interest rate. The seller retains legal title (the deed) until the contract is fully satisfied.

During the course of a land contract, the buyer has possession of and equitable title to the property, while the seller holds legal title. The buyer is responsible for all taxes and assessments. The buyer may assign or convey their interest in the contract, provided the assignment does not impair the seller's security interest in the property.

When the agreement is satisfied, the seller conveys legal title to the buyer by grant deed — free and clear of any liens or encumbrances other than current-year taxes and assessments. Land contracts can be used on most property types: residential, land only, mobile home with land, commercial, and mixed use.

Land contracts carry unique risks compared to conventional financing or AITDs. The buyer does not receive full legal title until the contract is complete, leaving them vulnerable if the seller incurs liens or goes into bankruptcy. Future liens against the seller may attach to the property since the seller still holds legal title. Team Goeglein at Fidelity National Title helps agents understand the title implications of land contracts and ensures proper documentation across all South Bay transactions.