A contract for deed is a type of real estate transaction. In a contract for deed, there is an agreement between a buyer and seller for the purchase of property. The seller provides financing and allows the buyer to buy the property for a set price by making monthly payments.
The seller in a contract for deed transaction basically acts as the lender and retains the title to the property being purchased until the purchase price is paid in full. This option is generally used when a buyer cannot qualify for a mortgage from a traditional lender, such as a bank or credit union.