A contract for purchase and sale is the instrument that you sign with a buyer that sets the terms of the transaction. It does not convey title in and of itself.
However, a land contract, agreement for deed, contract for deed, depending on what it is called in your respective state, which can be, if constructed correctly, can be a “recordable” document, which, when all payment are made thereunder, gives the borrower the right to obtain title. In other words, you are agreeing, as the seller, to convey title upon the completion of the terms of the contract.
While with a Contract of Purchase and sale, you are just setting the terms under which a later title conveyance instrument will be executed which sets the terms under which the title conveyance shall occur.
Land contract vs Purchase Contract - Posted by Brian_CA
Posted by Brian_CA on February 11, 2000 at 01:01:18:
Can anyone explain the differance between Land Contract and Contract of Purchase and sale? Also how do I use both of them and when. Thanks for the help in advance!
Re: Land contract vs Purchase Contract - Posted by Stacy (AZ)
Posted by Stacy (AZ) on February 11, 2000 at 10:45:05:
Judy defined the differences well. Just think of a Purchase and Sale contract as the initial agreement to start the sale going. It’s the starting point for the title company to get involved and plan for the closing.
There are several ways to close on the property, and convey title interest to the buyer. One of them is a trust deed, one is a contract for deed, one is a subject-to transaction, etc. But the sales contract starts the ball rolling.