What is a land contract?

A land contract is commonly understood as a financing agreement in which the buyer agrees to pay the seller directly for the property, typically in installments, rather than obtaining a mortgage from a bank or other lender. This type of arrangement allows buyers who may not qualify for traditional financing to secure property and provides sellers with a steady income stream from the payments. The seller retains legal title to the property until the full purchase price is paid, at which point ownership is transferred to the buyer. This arrangement creates a unique set of rights and obligations for both parties, making it distinct from other types of real estate transactions.

Understanding why this is the correct choice highlights the alternative options' concepts. A lease agreement pertains to the rental of property rather than purchase, a contract between investors generally refers to joint ventures or partnerships for acquisition, and a legal document for transferring ownership relates more closely to deeds rather than the direct payment method of a land contract.