Dear Forms Committee: What is the difference between the seller providing a deed or contract at closing, as identified in Section 1 of the Sale Agreement?

When a buyer and seller enter into a Sale Agreement that requires seller-carried financing, they can choose between two different methods of documenting the financing: (1) a Promissory Note and Trust Deed, or (2) a Land Sale Contract (also known as a Contract of Sale). If they choose the first method, the documentation is similar to what it would be if a bank was involved: a Deed is recorded at closing, followed immediately by the recording of a Trust Deed to secure the financing. If they choose the second method, only the Land Sale Contract (or a Memorandum of the Land Sale Contract) is recorded at closing: the Deed is not recorded until the final payment of the loan is made. The parties should talk with a lawyer if they want advice about which method of documenting the financing they should choose.

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