A land contract—also known as a contract for deed, an installment land contract, or a land sales contract—is an agreement between a buyer and seller for the sale and purchase of a specific piece of land. Land contracts may consist of undeveloped land or include both land and building structures located on the land.

Land contracts are often completed with seller financing in which the buyer pays the seller in monthly payments or installments that include an agreed interest rate and a lump sum balloon payment after a certain number of years. When the buyer has made the monthly payments for the required number of years, plus any balloon payment, the seller is required to transfer the title (evidence of ownership) to the buyer, as provided by the land contract.

Land contracts may also be financed by banks or other lenders—often with traditional deed of trust or mortgage agreements. Bank and other lender loans for undeveloped land will often be financed at a higher interest rate and for a shorter term (with a balloon payment) than a traditional home mortgage, for example.

When the balloon payment to the bank or lender comes due a builder or developer may get a takeout loan to replace the existing loan—with the expectation of securing better terms (interest rate, etc.) because the land will be developed (at least in part) and the loan will be better secured by the value of the development (building structures, etc.) on the land.

In Illinois, a land contract, also known as a contract for deed, is a legal agreement where the buyer agrees to pay the seller for a property in installments, including interest, over a certain period of time, with the possibility of a balloon payment. The seller retains legal title to the property until the buyer completes all payments, at which point title is transferred to the buyer. These contracts are recognized under Illinois law and are subject to specific regulations, including the Illinois Installment Sales Contract Act. This act requires certain disclosures and protections for buyers, such as the right to a grace period for late payments and the right to cure defaults under certain conditions. Financing for land contracts can come from the seller (seller financing) or from traditional lenders like banks, although loans for undeveloped land typically have higher interest rates and shorter terms compared to traditional mortgages. When a balloon payment is due, a builder or developer may seek a takeout loan to pay off the initial loan, often with the expectation of securing better loan terms due to the increased value from developed land.