Illinois Articles of Agreement For Deed
Seller Financing Primer
In the wake of the subprime lending crisis and the credit crunch from 2007 to 2010, the “Articles of Agreement for Deed”, also known as an “Installment Land Contract”, has re-emerged as an important tool for the transfer and sale of Illinois real estate.
As one of a few methods commonly referred to as “seller financing”, Articles of Agreement for deed create a transaction whereby a seller (also referred to as a vendor) maintains legal title to real estate and the right to receive payments under the Articles while the buyer (or vendee) receives “equitable title” (ie. the buyer is the real owner of the property) to the property and makes installment payments to the Seller. When the Buyer has paid the full contract price, the Seller conveys a deed to the Buyer and the transaction is at an end.
Articles of Agreement are legal and enforceable in Illinois. Title companies will even insure the interest of an Articles buyer. Oftentimes, a buyer will have fewer rights under the agreement than if the buyer purchased with a traditional mortgage loan and received title to the real estate at a conventional closing. Upon default, the land and payments to the seller may be forfeitted and possession lost.
An Installment Land Contract for Deed transaction usually requires two closings. The first, a simple closing where the Articles contract is signed, the warranty deed conveying title is executed and placed into escrow, and a down payment paid. Upon the successful repayment of the full debt obligation or a refinance paying off the balance of the purchase price, the parties will attend a second closing where the actual title transfer will occur.
Because of the vast complexities of an Installment Contract transaction, neither a buyer nor a seller should contemplate such a transaction without consulting with an attorney.
Services and Fees
We provide advice to installment contract buyers and sellers as well as installment contract drafting and review. Fees vary depending on the complexity of the transaction, but are usually charged hourly, depending on your transaction at a rate around $350 per hour plus costs.
How to Get Started
The first step to preparing seller financing is to give us a call. We are generally willing to provide a paid half-hour consultation over the telephone to determine if we can assist in your situation and to determine if we might be an appropriate match to work with you. Please note that many transactions are not suitable to use seller financing and we do not accept every case that is presented to us. Face to face Initial consultations are by appointment only and the consultation fee is also charged at a minimum time of one hour. To get this process started, please feel free to contact Richard Magnone via email or by phone at 773-399-1122.