After signing a contract for deed, what does the buyer immediately receive?

Upon signing a contract for deed, the buyer immediately receives equitable title. This concept refers to the buyer's rights to enjoy and control the property as if they were the legal owner, even though legal title remains with the seller until the contract terms are fulfilled, including any required payments. This means that while the buyer does not hold the formal legal title or ownership yet, they do hold the benefits and responsibilities associated with ownership, such as the right to occupy and use the property.

The distinction between legal title and equitable title is crucial in real estate transactions. Legal title is what allows an individual to exercise official ownership rights, such as the ability to sell the property or take out a mortgage. In a contract for deed, since the seller retains legal title until all obligations are met, the buyer’s ownership is effectively secured by their equitable interest in the property. This arrangement helps protect the buyer’s investment while allowing the seller to retain some control until the sale is completed.

Full ownership would require the transfer of legal title, which occurs only upon completion of all contractual obligations. Therefore, stating that the buyer receives full ownership is not accurate in the context of a contract for deed. Similarly, a mortgage entails borrowing against the property, which is not applicable in the immediate