What type of title does a buyer acquire when entering into a contract for deed?

When a buyer enters into a contract for deed, they acquire equitable title. Equitable title refers to the buyer's right to obtain legal title to the property upon fulfilling the contractual obligations set forth in the contract for deed.

In this arrangement, the buyer takes possession of the property and has rights to use and benefit from it, but the legal title remains with the seller until the purchase price is fully paid or other conditions of the contract are met. This structure allows the buyer to enjoy certain benefits of ownership, such as the ability to occupy and maintain the property, while also bearing the responsibilities, like making payments and maintaining the property.

The distinction is crucial because it indicates that while the buyer holds a vested interest and rights associated with ownership, the formal legal ownership is still held by the seller until certain conditions are satisfied. Understanding equitable title is important for buyers as it affects their rights and obligations under the contract, as well as their long-term goal of obtaining legal title.