What is a Bond for Deed? Explained.

Under Louisiana State Legislature a Bond for Deed is defined as the following: “a Contract to sell real property, in which the purchase price is to be paid by the Buyer to the Seller in installments and in which the Seller after payment of a stipulated sum agrees to delivers Title to the Buyer.”

In a “normal” buying situation the Seller transfers the Title to the Buyer at the Sale. With a Bond for Deed Contract, a form of Owner Financing, the Seller retains the Title until the full sale amount is paid by the Buyer to the Seller. Bind for Deed is not the same as a Lease to Own Contract; in a Bond for Deed Contract, the Buyer has rights to the property, can make improvement, is able to claim property tax and interest, can refinance the property, or even sell the property in order to pay the Seller any amount remaining on the original contract.

Since the Title to the property remains with the Seller, default of a Bond for Deed can happen very quickly if payments are not being met, unlike a normal foreclosure. In this case, the contract can be cancelled within 45 days and the Title, Down Payment and monthly payments made to date are retained by the Seller.

When is a Bond for Deed Contract the better option for some Sellers & Buyers?

A Bond for Deed is not necessarily contingent on credit checks or credit approvals, unless the contract specifically requires it. The Down Payment percentage is agreed upon by the Buyer and Seller, along with the interest rate and other terms.  This may make it easier for some Buyers to purchase a home if interest rates have increased or a Buyer has difficulty qualifying for traditional financing. 

A Bond for Deed sale can close quickly, if both parties agree and much sooner than a conventionally financed sale. 

A Bond for Deed Contract can be a short-term solution for a Buyer with unusual circumstances and for a Seller that does not need the proceeds from a sale immediately.

With over 30 years of experience, the Burk Brokerage Team understands and can guide the parties through the details of a Bond for Deed Transaction on their New Orleans Metro area property!