Also called a Qualified Installment Land Contract™ (QILC™)

One of the traditional drawbacks to the use of a Contract for Deed has been the lack of an acceptable standard for elements which should be included by the buyer and seller in these documents.

In the development of this new hybrid financing method, since the initial phase of the ownership utilizes the contract for deed legal method for the buyer to obtain an immediate ownership equitable interest, we have developed a list of recommended contract elements, as well as other procedures which the Buyer and Seller should consider.

They are grouped below to help define a Qualified Contract for Deed™ (QCD™).

By using these elements in each agreement, we hope to simplify and standardize these types of transactions.

 A. This is the list of the elements that should be included in order to achieve QCD™ financing status for the sale of
a home:

1. The Agreement should be in writing and address applicable State Statutes governing this type of sale. Sample basic interactive documents for each state are available through the Rocket Lawyer document provider on our website, including Notary contract recording provisions. We anticipate that most multiple unit seller/landlords will use their own attorney and modified documents.

2. The contract purchase price, down payment amount, contract term, interest rate, and monthly payments will be in the contract. Developing these elements and negotiating contract value are discussed on the H.O.M.E.S website.

3. Affirmative Buyer termination provisions, and Seller remedies in the event of default, should be outlined and agreed upon, including any late fees.

4. Existing title insurance information should be updated and provided by the Seller to the Buyer, and the deed should be escrowed and/or restricted. The QCD™ should be recorded.

5. Any property encumbrance, such as an existing mortgage and bank financing, should be acknowledged through a contract assignment to the mortgagor, or a recognition agreement with the mortgagor, or an escrow payment arrangement with the buyer, or other suitable means in order to provide confirmation protection to the buyer that the underlying mortgage(s) is being timely serviced.

6. Property taxes and insurance become the responsibility of the buyer. Amounts and timing should be itemized, and depending on local law and payment requirements, may be escrowed, or forwarded to the seller to make timely payments.

7. The seller should provide buyer with an accounting of the monthly payments and their contract application, and an annual summary of the principal and interest amounts paid by the buyer no later than January 31, after the end of each calendar year, for income tax purposes.

8. Future assumption of the contract by a new buyer, if the property is resold, with seller approval, should be considered by the parties for inclusion in the contract.

B. In addition to the contract itself, we advise the buyer and seller to strongly consider the following:

1. We recommend that both parties have legal Counsel. We have arranged for prepaid legal services from Legal Shield on a national basis for the tenant buyers. They will advise the buyers, and also be building a library, by State, of recommended documents and provisions as they are developed.
2. We suggest that a real estate professional be consulted to assist in the valuation process, terms and closing assistance. We are also working to provide appraisal services to develop a suggested range for the contract value to simplify the negotiation.
3. We recommend that a home inspection be obtained, and any items requiring attention be addressed in the contract.
4. We recommend that a home warranty be purchased by the seller for mechanical systems and appliances.
5. The seller should consider being responsible for all closing costs at mortgage refinance and deed title conveyance, including real estate professional fees, title insurance, real estate transfer taxes, and seller refinance costs.  The buyer should be responsible for any refinance costs which they incur in the event of prepayment of the contract through mortgage refinance.