In a contract-for-deed arrangement, which party typically holds legal title until the contract is fulfilled?

• A. The buyer
• B. The lender
• C. The title company
• D. The seller

Answer: (D)

In a contract-for-deed, the seller keeps legal title to the property as security for the buyer’s performance. The buyer receives equitable title and possession, meaning they can live in or use the property and build toward ownership, but the deed isn’t transferred until the contract is fully fulfilled. Once the buyer makes all payments, the seller transfers legal title to the buyer via deed, completing the sale. This arrangement gives the seller protection against nonpayment, since they still hold the title until the contract is satisfied. The lender wouldn’t hold title in this setup, as it’s seller financing rather than a bank loan; a title company isn’t the holder of title either—it’s the seller who retains it.