Some sellers feel safer to retain ownership of their property until the purchase price is fully paid, making tempered financing more satisfying than the seller withdraws an alternative financing. (Conversely, some sellers might not want to stay the property if they don`t have control of the property.) When a instalment payment contract is signed between the buyer and the seller, the buyer becomes the equitable owner of the property (which is land, accessibility or conservation easement). This means that the buyer can exercise all rights of ownership, use and enjoyment of the property during the term of the contract at time. However, the seller reserves the legal ownership (sometimes called simple legal ownership) of the property. This gives a guarantee to the seller – if the buyer does not make payments in accordance with the terms of the tempering agreement, the seller can recover the property faster and at a lower cost than in the case of forced execution of a mortgage. The parties agree to instalment payments of an amount and frequency sufficient to encourage the seller to move the property away from the market and to cover the seller`s transportation costs (property taxes, etc.) for the continuation of ownership of the property. At some point, a balloon payment must be made to complete the purchase. In the event that the buyer cannot make the payment, the seller`s remedies are limited to the termination of the contract at the time. The risk of the conservation organisation would be limited to the loss of amounts already paid at the end of the year.
The distribution of the tax burden over a period of one year can offer the seller willing to accept the payment of the purchase price over two or more tax years, possibilities for tax, estate and financial planning, whether through withdrawal financing of the seller or by phased financing. Using a instalment payment agreement is rather a good strategy if one or more of the following circumstances apply: in some cases, a conservation organisation may prefer a payment agreement in instalments to repayment by the seller, as individuals and institutions may be more willing and motivated to contribute to the purchase of real estate than paying off a mortgage on the same property. The expected conservation outcome may be the same, but donor perception may not be. Leasing and contract-by-act transactions have been used for many years by unscrupulous operators to defraud vulnerable parts of the population. Pennsylvania`s Ratenlandvertragsgesetz (68 P.S. .