Hear Ye, Hear Ye—A Contract for Deed in Illinois

Standardized Legal Documents Hear Ye, Hear Ye—A Contract for Deed in Illinois

Buying a Property With a Contract for Deed in Illinois

Drafting contracts and preparing legal documents can be intimidating, especially if you do not have enough funds for legal guidance. Do you need to get familiar with laws and rules regarding a contract for deed in Illinois, or can you get help in some other way? 

DoNotPay can assist you with this matter as this article provides important information about drawing up this type of contract. We can also assist you with the preparation of formal documentation necessary for your smooth operation. 

What Is a Contract for Deed in Illinois?

A contract for deed is a document used when purchasing a home or other residential property. This contract also goes by some of the following names:


  • Rent-to-own
  • Land contract
  • Bond for deed
  • Agreement for deed
  • Articles of agreement
  • Installment sales contract

In this type of contract, the buyer of the property does not get the title to the home until he or she has made all the payments defined in the agreement. This type of arrangement differs from the typical mortgage transactions. 

A Mortgage vs. a Contract for Deed in Illinois

The following table outlines the differences between a mortgage and a contract for deed:

Mortgage Contract for Deed
The buyer:

  • Takes a loan from a lender 
  • Uses the loan to pay the seller for the property
  • Becomes the owner of the home immediately
  • Acquires title at the time of the purchase
  • Has to repay the loan:
    • To the lender
    • Through monthly payments
    • Over a longer period—often around 30 years
The buyer:

  • Is not the owner of the property at the start of the contract
  • Does not receive title to the home with the signing of the contract
  • Makes payments:
    • To the seller
    • Through monthly installments
    • Over some time—commonly five years or more
  • Needs to pay a lump sum—or a balloon—payment at the end
  • Has to purchase homeowner’s insurance and pay:
    • Any repairs 
    • Real estate taxes
  • Becomes the owner when he or she makes all the payments due under the contract for deed
The lender:

  • Has a lien on the property
  • Can enforce the mortgage lien if the buyer defaults on making the necessary payments

The buyer’s failure to pay out the loan will result in:

  1. A foreclosure lawsuit 
  2. A court ordering the sale of the property
The seller:

  • Is the owner and retains title to the property until the buyer pays out all contractual payments 
  • Can file:
    • An eviction case if the buyer fails to make any required payments
    • A foreclosure lawsuit if the buyer defaults on making the required payments but has already settled more than 20%—this option offers greater protection than the eviction for the buyer 

Key Legal Aspects Regarding a Contract for Deed in Illinois

The Installment Sales Contract Act applies to contracts for deed in Illinois. Here is a list of some important aspects concerning a contract for deed:

  1. The seller needs to:
    • Provide one copy of the contract for deed at least three days before the closing—this time is called the cooling-off period
    • Record the contract or a memorandum of the contract in the public land records to acknowledge your legal interest in the property. Otherwise, you can cancel the contract 
    • Provide you with an account statement when requested 
  2. The seller cannot:
    • Charge a prepayment penalty if you decide to make payments before you are required 
    • File a foreclosure or eviction lawsuit against you until first giving you 90 days to pay any late fees and charges

Keep in mind that a contract for deed has to be in writing. If you are interested in finding out:

Use the Cooling-Off Period Wisely

As the Illinois State law sets a three-day cooling-off period for contracts for deed, you are not required to sign the agreement during this time. However, you might want to use this period to:

  1. Consider your decision 
  2. Read the contract carefully
  3. Obtain additional information
  4. Get the property appraised and inspected
  5. Consult an attorney or a housing counselor

If at any time you believe you are the victim of fraud, you should get in touch with the Illinois Attorney General’s Office.

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You should stop spending your money on expensive lawyers and time on online templates that are too generic. DoNotPay can help you prepare numerous agreements and other types of formal documentation to secure your personal or professional interests.

Here is the list of some documents we can help you with:

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