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 Massachusetts, a land contract, also known as a contract for deed, is a form of seller financing for the purchase of real estate. Under this arrangement, the buyer agrees to pay the seller the purchase price in installments, often including interest and possibly a balloon payment at the end of the term. The seller retains legal title to the property until the buyer completes all payments according to the contract terms, at which point the seller is obligated to transfer the title to the buyer. If the land contract includes a balloon payment, the buyer may need to secure additional financing to meet this obligation. This can be through a takeout loan, which is a type of loan used to pay off a short-term loan, such as the one associated with a balloon payment. The terms of financing for undeveloped land can differ from traditional mortgages, often carrying higher interest rates and shorter terms. It's important for both buyers and sellers to understand the terms of a land contract and to ensure that it complies with Massachusetts state laws, which may include specific requirements for contracts for deed. An attorney can provide guidance on the legal requirements and help draft a land contract that protects the interests of both parties.