An installment contract is an alternative to traditional mortgage financing where the buyer pays the sales price to the seller in installments over time. Instead of a deed and mortgage, the buyer and seller enter into a long-term installment contract, also referred to as articles of agreement, contract for deed, land contract, conditional sales contract, or an agreement for deed. The contract permits the buyer to obtain equitable title and to take possession of the real estate while the seller retains the legal title. The installment contract requires the buyer to make periodic payments to the seller, and when all the payments have been made, the seller conveys the land to the buyer.

ATG permits member agents to insure the interest of an installment contract buyer using a Contract Purchaser’s Policy. This policy is paid for and issued at the time the installment contract is signed, with the installment contract buyer listed as the named Insured on Schedule A. The policy is issued on the Owner’s Policy form with adjustments made to Schedule A to indicate the nature of the contract buyer’s interest.

• Do not issue a commitment for an Owner’s Policy to the contract buyer and hold it open during the pendency of the contract.
• Do not issue an Owner’s Policy listing both buyer and seller as titleholders, “as their interests may appear.”

Once the buyer completes the payments and the seller gives a deed to the buyer, the Contract Purchaser’s Policy may be converted to an Owner’s Policy insuring the fee title. ATG collects only the minimum policy charge for the conversion of a Contract Purchaser’s Policy to an Owner’s Policy, so long as the named Insured and Amount of Insurance remain the same.

ATG’s Underwriting Guidelines for Illinois and Wisconsin contain descriptions of the procedures to issue a Contract Purchaser’s Policy.

Questions? Contact an Underwriter.