Contract for Deed in Tennessee

Contract for Deed in Tennessee: A Comprehensive Guide for Homebuyers

If you are a prospective homebuyer in Tennessee, you may have heard of a contract for deed as an alternative to traditional mortgage financing. A contract for deed is a legal agreement between a seller and buyer where the buyer makes regular payments directly to the seller and can eventually own the property outright. In this article, we’ll dive into the details of contract for deed transactions in Tennessee and what you need to know before entering into one.

What is a Contract for Deed?

A contract for deed (also known as land contract or installment sale agreement) is a type of seller financing in which the seller acts as the lender. In a contract for deed transaction, the buyer and seller agree on a purchase price, interest rate, and payment schedule. The buyer makes regular payments directly to the seller, and the seller retains legal ownership of the property until the buyer pays the entire purchase price.

Contract for deed transactions can offer advantages over traditional mortgage financing. They can be easier to qualify for, especially if the buyer has poor credit or a limited credit history. Additionally, they can be faster and less expensive to complete than traditional mortgage financing, as they usually do not require a credit check, appraisal, or title search.

However, contract for deed transactions also carry risks for both the buyer and seller. For example, if the buyer fails to make payments, the seller can foreclose on the property and keep all the money paid to that point. On the other hand, if the seller fails to keep up with property taxes or a mortgage on the property, the buyer could lose their investment.

Contract for Deed in Tennessee

In Tennessee, contract for deed transactions are governed by state law, which sets out specific requirements that must be met to ensure that the transaction is legal and enforceable. These requirements include:

1. Written contract: The contract for deed must be in writing and signed by both the buyer and seller.

2. Disclosure statement: The seller must provide the buyer with a written disclosure statement that contains certain information, such as the purchase price, interest rate, payment schedule, and the rights and responsibilities of both parties.

3. Recordation: The contract for deed must be recorded with the register of deeds in the county where the property is located. This protects the buyer’s interest in the property and ensures that the contract is enforceable against third parties.

4. Right to cure: The buyer has a right to cure any default in payment or other breach of the contract before the seller can terminate the agreement and cancel the buyer’s interest in the property.

5. Default and foreclosure: The contract for deed must include provisions for default and foreclosure, including the notice required to be given to the buyer, the opportunity to cure the default, and the procedures for selling the property if foreclosure becomes necessary.


A contract for deed can be a viable alternative to traditional mortgage financing in Tennessee, but it is important to fully understand the terms of the agreement and the risks involved before entering into one. If you are considering a contract for deed, seek the advice of a qualified real estate attorney to ensure that the transaction is legal and in your best interest. By following the requirements set out by state law, you can protect your investment and secure your future homeownership in Tennessee.