In the event a buyer defaults in the terms of a contract for deed, the seller may cancel the contract. It is not necessary for the seller to go to court to cancel the contract. In order to cancel a contract for deed, a seller needs to complete a form called a notice of cancellation of contract for deed, and have the notice personally served on the buyer.
The buyer will then have 60 days after service to cure the default, or the contract for deed will be cancelled and the seller will be allowed to take possession of the property. Any payments that the buyer has made on the contract prior to cancellation remain the property of the seller.
An attorney usually prepares a notice of cancellation of contract for deed, and makes arrangements to serve the notice on the buyer. A seller can cancel a contract for deed for buyer’s default in making the monthly payments. Default also can include buyer’s failure to pay property taxes, insurance, or adhere to other terms in the contract for deed.
One advantage of a contract for deed over a mortgage, is that a contract for deed is cancelled within 60 days after the buyer receiving notice of the cancellation. It can take as long as 9 to 12 months to foreclose a mortgage.
If a buyer does not voluntarily vacate the property after a contract for deed has been cancelled, then the seller must go to court to obtain an order evicting the buyer from the property. In most cases, the seller is stuck paying for any damage to the property caused by the buyer during the period of ownership. In some case, the seller may be able to bring a lawsuit against the buyer to recover the amount of the damages.