What Happens if a Buyer Backs Out of a Contract for Deed Sale?
When the purchaser has defaulted on a land installment sales contract, the vendor has a right to be made whole and to be placed in the position that he would have been in had the purchaser fully performed. If the purchaser defaults, the vendor may foreclose the contract under the foreclosure laws of the state. Depending upon the equities, there is a broad range of potential resolutions to the suit. The court may (i) strictly enforce the contract in accordance with its terms, upholding the forfeiture of the buyer’s equity in the premises, (ii) find that a default has occurred, but give the buyer a deadline by which he can pay off the balance of the purchase price and succeed to fee title, (iii) find that the forfeiture is inequitable and compel the seller to return a portion or all of the purchase price previously paid, (iv) find that the contract is really a mortgage, and require the seller to institute foreclosure proceedings, or (v) deny the forfeiture and reinstate the contract.