- #NOTICE OF INTENT TO FORECLOSE ILLINOIS TEMPLATE FULL#
- #NOTICE OF INTENT TO FORECLOSE ILLINOIS TEMPLATE PLUS#
The seller holds the legal title in trust for the buyer and the buyer holds the purchase money in trust for the seller. The buyer holds equitable title once the contract is executed. "quitable conversion is the treating of land as personalty and personalty as land under certain circumstances." Shay, 25 Ill 2d at 449, 185 NE2d at 219. The interests of a seller and a buyer under an installment contract are determined by the doctrine of equitable conversion. Buyers also like installment contracts because under such agreements they generally pay a lower down payment and have lower closing costs. Therefore, sellers under an installment contract may be more willing to sell to buyers who do not meet the qualifications of traditional lenders. Additionally, under an installment contract when a buyer defaults, a seller may not always bound by mortgage foreclosure laws but instead can recover possession more quickly and at less expense. One benefit for a seller is the tax advantage of receiving installment payments over an extended period of time. Therefore, the "party seeking to enforce the forfeiture has the burden of proving that the right to forfeiture clearly and unequivocally exists and that no injustice will result in its exercise." Id.įewer formalities and greater flexibility create advantages for both the seller and buyer to an installment contract. Because of the possibility of inequitable results, courts generally look negatively upon forfeiture clauses, Id, and they will be strictly and narrowly construed. This is true mainly because of forfeiture provisions, which give the buyer no right of redemption and allow a buyer to lose all interest in the property for even the slightest breach. Kirkpatrick v Petreikis, 44 Ill App 3d 575, 577, 358 NE2d 679, 680, 3 Ill Dec 281, 282 (3rd D 1976).Īn installment contract offers a buyer less protection than a traditional mortgage. To prevent waiver of the clause, the seller should not accept late payments from the buyer. Also, when drafting the contract, a seller should be sure to include a time-is-of-essence clause. However, for a court to enforce forfeiture of an installment contract, the right of forfeiture must be expressly provided for in the contract. Compared to mortgage foreclosure, the seller can recover the property more quickly because he or she is not required to sell the property, observe notice and redemption rights, or file a court case. The majority of installment contracts include a forfeiture clause, which allows a seller, upon buyer's default, to end the contract, regain possession of the property, and keep all payments made by buyer. While the installment contract is a security device, it lacks many of the formalities and buyer protections included in mortgage laws. Under an installment contract, the buyer gets possession of the property and makes installment payments of the purchase price over an extended period of time to the seller, who conveys legal title to property once the purchase price is fully paid.
This article is an overview of how installment contracts are created, what interest the parties to an installment contract hold, and how such contracts can be terminated.Īn installment contract is an alternative to traditional mortgage financing. Installment contracts are an alternative to traditional mortgage financing and can benefit both the seller and buyer in a real estate transaction. The seller delivers the deed to the buyer once the final payment is made.
#NOTICE OF INTENT TO FORECLOSE ILLINOIS TEMPLATE FULL#
Upon execution of the contract the buyer immediately takes possession, but the seller retains legal title to the property until the buyer pays the full purchase price.
#NOTICE OF INTENT TO FORECLOSE ILLINOIS TEMPLATE PLUS#
An installment contract (also called a land contract or articles of agreement for warranty deed or contract for deed) is an agreement between a real estate seller and buyer, under which the buyer agrees to pay to the seller the purchase price plus interest in installments over a set period of time.