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Contract for Deed
Is a Bond for Deed sale considered a rental by a condo association?

Is a Bond for Deed sale considered a rental by a condo association?

Q: What are the benefits of a bond for a deed?

The benefits of a Bond for Deed include easier qualification for buyers who may struggle with traditional loans, the ability to live in the property while paying for it, and potentially lower closing costs. It also allows sellers to receive steady income while retaining ownership until the buyer pays off the property.

Q: What is another name for a bond for deed?

Another name for a Bond for Deed is a contract for deed. This term reflects the agreement where the buyer makes payments to the seller until the full purchase price is paid and the title is transferred.

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.

Category: Contract for Deed
Date: 04/07/2025
State: Illinois

Answer:

The classification of a Bond for Deed sale as a rental depends on the condominium association's bylaws and governing documents. Typically, a Bond for Deed, also known as a contract for deed, is a legal agreement where a buyer pays for real property in installments. After a specified payment, the seller agrees to transfer the title to the buyer. While it has similarities to renting or leasing with an option to buy, it is not exactly the same.

If the bylaws do not clearly define what constitutes a rental, it may be possible to amend them. In general, when interpreting vague contract terms, the following hierarchy is used:
a) Terms from discussions and writings between the parties that do not contradict the contract;
b) Terms implied by the conduct of the parties;
c) Terms implied by industry custom; and
d) Terms implied by applicable law.

In summary, whether a Bond for Deed sale is treated as a rental will depend on the specific language in the condominium association's governing documents.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

How does a bond for deed work?

A Bond for Deed, or contract for deed, is a real estate agreement where the buyer makes installment payments to the seller for a property. The seller retains the title until the buyer completes the payments. Once the final payment is made, the seller transfers the title to the buyer. This arrangement allows buyers to occupy the property while paying for it, similar to renting, but with the intention of ownership.

Is a bond for deed a good idea?

A Bond for Deed can be a good option for buyers who may not qualify for traditional financing. It allows them to purchase a home while making manageable payments. However, buyers should be cautious, as they do not hold the title until all payments are made, which can pose risks if the seller defaults or if there are issues with the property.

What is a deed bond?

A deed bond is a type of surety bond that guarantees the performance of obligations related to a property deed. It ensures that the seller will fulfill their promise to transfer the title to the buyer upon completion of the agreed terms. This term is often confused with a Bond for Deed, which is a financing method rather than a bond.

What are the benefits of a bond for a deed?

What is another name for a bond for deed?

Is contract for deed the same as seller financing?

While a contract for deed and seller financing are similar, they are not the same. In a contract for deed, the seller retains the title until the buyer completes payments. In seller financing, the buyer receives the title immediately but pays the seller directly, often with a mortgage or promissory note. Both methods allow buyers to purchase property without traditional bank financing.