Is a Bond For Deed Like a Lease Until Title Transfers?

Full Question:

Is a Bond for Deed sale considered a 'rental' by a condominium association until the 'bond' changes to a 'deed'? My condo association limits rentals to 10% of units. Owners are trying to get around it by selling Bond for Deed.
02/17/2010   |   Category: Contract for Deed   |   State: Illinois   |   #21007

Answer:

The answer will depend in part on the term in the association bylaws and governing documents definig what a rental is. Commonly, a contract for deed is similar to, but not exactly the same as a rental. If the term isn't defined, it may be possible to amend the bylaws. The general rules of contract law follow a hierarchy of evidence when determining the terms of a vague or incomplete contract, as follows:

a) The terms stated in the discussions and writings exchanged by the parties that don't contradict the contract terms;

b) Terms implied by the current and past conduct of the parties;

c) Terms implied by industry custom and practice; and

d) Terms implied by applicable law, i.e., damages for breach, liability for negligence, jurisdiction and venue, etc.

A bond for deed is 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 deliver title to the buyer. It may also be called a "contract for deed".

A bond for deed allows the seller and purchaser to elect specific requirements concerning purchase price, interest, and payment terms. Also, fees related to insurance and taxes can be set in the direction of seller or the purchaser at their option before the signing of the agreement.

A bond for deed can be compared to renting or leasing with the option to buy, though they are not entirely one in the same. Such options are different in that the agreement is usually filed and is a legal arrangement, giving the renter or lessee the option to buy the property at a prearranged time during the loan. Rent payments then become equity in the property.