Truth in Lending Act (TILA / Regulation Z) — Application to Contract for Deed

Legal information, not legal advice. Verify against the cited statute / rule before acting. Federal rules and thresholds change; confirm the current U.S.C./C.F.R. text and any CFPB guidance. Last verified: 2026-06-08.

A contract for deed / installment land contract on a home is not outside the Truth in Lending Act merely because it uses a “contract” instead of a “note and mortgage.” TILA and its implementing Regulation Z define their scope by the economics of the transaction — consumer-purpose credit, secured by a dwelling, extended by someone who does it regularly — not by the label of the instrument. When a CFD meets that test, the seller is a creditor who must deliver the federal credit-cost disclosures (APR, finance charge, payment schedule, total of payments, total sale price) before the buyer signs, on top of any state CFD disclosure statute.

This page maps when TILA/Reg Z attaches to a seller-financed CFD on a dwelling, the disclosure regime it imposes, the high-cost-mortgage (HOEPA) overlay, and how the loan-originator / ability-to-repay rules (covered in depth at dodd-frank-seller-financing) and MLO licensing (safe-act-mlo) sit on top. The seller-financer carve-outs that practitioners reach for live in those two rules — not in TILA’s core disclosure duty, which has no small-seller exemption once the seller is a “creditor.”

Authority (statute): Truth in Lending Act, 15 U.S.C. § 1601 et seq. (Title I of the Consumer Credit Protection Act). Purpose: “to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit.” 15 U.S.C. § 1601(a). Retrieved https://www.law.cornell.edu/uscode/text/15/1601 (2026-06-08).
Authority (regulation): Regulation Z, 12 C.F.R. part 1026, “issued by the Bureau of Consumer Financial Protection to implement the Federal Truth in Lending Act … (15 U.S.C. 1601 et seq.).” 12 C.F.R. § 1026.1(a). Retrieved https://www.law.cornell.edu/cfr/text/12/1026.1 (2026-06-08).

1. The coverage trigger — four conditions, all of which an owner-financed home sale can meet

Regulation Z applies only where all four of the following are true (12 C.F.R. § 1026.1(c); retrieved https://www.law.cornell.edu/cfr/text/12/1026.1, 2026-06-08):

The credit is offered or extended to a consumer — a “natural person to whom consumer credit is offered or extended” (§ 1026.2(a)(11));
The offering or extension of credit is done regularly — i.e., by a creditor (the volume test, below);
The credit is subject to a finance charge or is payable by written agreement in more than four installments; and
The credit is primarily for personal, family, or household purposes (§ 1026.2(a)(12) “consumer credit”).

A typical residential CFD — a natural-person buyer, monthly installments (far more than four) usually at interest, on a home to live in — satisfies conditions 1, 3, and 4 on its face. The whole question is condition 2: is the seller a “creditor”? And condition 4 requires the collateral to be a dwelling used by a consumer — raw land or a business-purpose deal falls out. Source: 12 C.F.R. §§ 1026.1(c), 1026.2(a)(11)–(12); retrieved https://www.law.cornell.edu/cfr/text/12/1026.2 (2026-06-08).

”Dwelling” — the collateral test

Reg Z’s dwelling is “a residential structure that contains one to four units, whether or not that structure is attached to real property[,] … includ[ing] an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.” 12 C.F.R. § 1026.2(a)(19) (retrieved https://www.law.cornell.edu/cfr/text/12/1026.2, 2026-06-08). TILA’s parallel statutory definition is “a residential structure or mobile home which contains one to four family housing units.” 15 U.S.C. § 1602(w) (retrieved https://www.law.cornell.edu/uscode/text/15/1602, 2026-06-08). A CFD on vacant or agricultural land with no dwelling, or on commercial property, is therefore outside the dwelling-secured rules (it may still be “consumer credit” if consumer-purpose, but the dwelling-specific protections — HOEPA, the LO Rule, ATR/QM, rescission — do not attach).

A CFD is a “credit sale” — and the seller is the “creditor”

Reg Z’s credit sale is “a sale in which the seller is a creditor.” § 1026.2(a)(16). In a CFD the same party sells the property and extends the financing, so the deal is structurally a credit sale, and the seller — if the volume test is met — is the creditor making the disclosures. The practical consequence is that a CFD seller owes the § 1026.18(j) total-sale-price disclosure that note-and-mortgage lenders do not (because in a pure loan the lender is not also the seller of the goods). Source: 12 C.F.R. § 1026.2(a)(16); retrieved https://www.law.cornell.edu/cfr/text/12/1026.2 (2026-06-08).

2. The “creditor” volume test — the gateway to TILA disclosure

TILA’s statutory definition: a creditor “refers only to a person who both (1) regularly extends … consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable.” 15 U.S.C. § 1602(g) (retrieved https://www.law.cornell.edu/uscode/text/15/1602, 2026-06-08).

Regulation Z supplies the numeric line for “regularly,” and for dwelling-secured credit it is set deliberately low:

“A person regularly extends consumer credit only if it extended credit … more than 5 times for transactions secured by a dwelling in the preceding calendar year. If a person did not meet these numerical standards in the preceding calendar year, the numerical standards shall be applied to the current calendar year.” — 12 C.F.R. § 1026.2(a)(17)(v) (retrieved https://www.law.cornell.edu/cfr/text/12/1026.2, 2026-06-08).

So a seller-financer who closes six or more dwelling-secured CFDs in a calendar year is a Reg Z creditor and owes the full § 1026.18 disclosure set on every such transaction — including the ones beyond the threshold and, prospectively, the first deals of the year in which the count is reached. A genuine one-off or low-volume seller (≤ 5 dwelling-secured sales a year) is not a Reg Z creditor for the disclosure rules — which is why the heaviest TILA disclosure exposure falls on the programmatic operator, not the occasional landowner.

Note — three different “seller-financer” thresholds, do not conflate them. The federal landscape has three separate count-based tests with different numbers and different consequences. (1) This page / TILA disclosure — “creditor” = more than 5 dwelling-secured extensions/yr (§ 1026.2(a)(17)(v)); being a creditor triggers the § 1026.18 disclosures and pulls you toward the ATR/QM rule, which has no seller-financer exemption (dodd-frank-seller-financing § 3). (2) Loan Originator Rule — seller-financer carve-outs at ≤ 1 property (§ 1026.36(a)(5)) and ≤ 3 properties (§ 1026.36(a)(4)) per 12 months, covered at dodd-frank-seller-financing § 2. (3) SAFE Act MLO licensing — “engaged in the business of a loan originator” (commercial context + habitualness, no federal number; some states draw a line, e.g. Idaho ≤ 5/yr), covered at safe-act-mlo. A seller can be under one and over another.

3. The disclosures TILA requires on a covered CFD

Where Reg Z attaches, the CFD seller-creditor must deliver the closed-end credit disclosures of § 1026.18, “clearly and conspicuously in writing, in a form that the consumer may keep,” “grouped together … segregated from everything else,” and — critically — “before consummation of the transaction.” 12 C.F.R. § 1026.17(a)–(b) (retrieved https://www.law.cornell.edu/cfr/text/12/1026.17, 2026-06-08). “Consummation” is the moment the buyer becomes contractually obligated, so the disclosures must precede signing the CFD.

The core § 1026.18 disclosures most relevant to a CFD (retrieved https://www.law.cornell.edu/cfr/text/12/1026.18, 2026-06-08):

§ 1026.18	Disclosure	Why it bites on a CFD
(a)	Creditor identity	The seller, as creditor, is named as the discloser.
(b)	Amount financed	The financed price net of down payment and prepaid charges.
(c)	Itemization of the amount financed	Breakdown to the buyer, to credits, and to third parties.
(d)	Finance charge	”the dollar amount the credit will cost you” — the all-in cost of the carry.
(e)	Annual percentage rate (APR)	“the cost of your credit as a yearly rate” — the headline number; mis-stating it is the classic TILA violation, and on a CFD it interacts with state usury-and-interest-caps.
(f)	Variable-rate terms	If the CFD rate can adjust (also relevant to the LO-Rule rate-cap conditions).
(g)	Payment schedule	Number, amount, timing of every installment.
(h)	Total of payments	”the amount you will have paid when you have made all scheduled payments.”
(j)	Total sale price	CFD-specific — required for a credit sale (§ 2 above): purchase price + down payment + finance charge.
(k)	Prepayment penalty/rebate	Whether the buyer can pay off early without penalty.
(l)	Late-payment charge	The late fee, which interacts with state default-cure rules (notice-and-cure).
(m)	Security interest	The collateral — here, the seller’s retained title / the buyer’s equitable-title in the dwelling.
(s)	Balloon / payment summary	A CFD balloon must be surfaced (and a balloon may blow the LO-Rule ≤ 3-property exclusion — see dodd-frank-seller-financing).

These are federal disclosures and are independent of any state CFD disclosure statute (e.g., the Texas executory-contract notices, the Minnesota disclosure regime). A compliant operator satisfies both layers; clearing the state statute does not excuse the TILA disclosures, and vice versa.

The TRID overlay (Loan Estimate / Closing Disclosure) — and a real CFD gap

For most closed-end consumer-credit transactions secured by real property, Reg Z’s § 1026.18 disclosures are delivered through the TILA-RESPA Integrated Disclosures (TRID) — the Loan Estimate (§ 1026.19(e)) and Closing Disclosure (§ 1026.19(f)). The scope provision reaches a transaction “secured by real property or a cooperative unit, other than a reverse mortgage.” 12 C.F.R. § 1026.19(e)(1)(i) (retrieved https://www.law.cornell.edu/cfr/text/12/1026.19, 2026-06-08).

The CFD nuance: TRID is keyed to real property (or a co-op), while the underlying TILA disclosure duty is keyed to a dwelling (which can be personal property — a mobile home or trailer not attached to land, § 1026.2(a)(19)). A CFD on an unaffixed manufactured home can therefore be a dwelling-secured but not real-property-secured transaction: the § 1026.18 disclosures still apply, but it may fall outside TRID and be disclosed on the older § 1026.18 model forms instead. The precise boundary (and whether the home is “real property” under state-law affixation rules) should be confirmed deal-by-deal — flagged under needs_verification. Source: 12 C.F.R. §§ 1026.18, 1026.19(e)(1)(i), 1026.2(a)(19).

4. Right of rescission — generally NOT available on a CFD purchase

TILA gives a consumer a three-business-day right to rescind a credit transaction “in which a security interest … is or will be retained or acquired in [the] consumer’s principal dwelling.” 12 C.F.R. § 1026.23(a). But the right is expressly exempted for “(1) A residential mortgage transaction.” 12 C.F.R. § 1026.23(f)(1) (retrieved https://www.law.cornell.edu/cfr/text/12/1026.23, 2026-06-08).

A residential mortgage transaction is “a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained in the consumer’s principal dwelling to finance the acquisition or initial construction of that dwelling.” 12 C.F.R. § 1026.2(a)(24); identically in TILA at 15 U.S.C. § 1602(x) (“purchase money security interest arising under an installment sales contract”). Retrieved https://www.law.cornell.edu/cfr/text/12/1026.2 and https://www.law.cornell.edu/uscode/text/15/1602 (2026-06-08).

That definition names the installment sales contract by which a buyer acquires a home. Two consequences for CFDs:

A purchase-money CFD is a residential mortgage transaction, so the buyer generally has no TILA rescission right — the federal cooling-off window does not undo the purchase. (Special timing rules for residential mortgage transactions also displace the ordinary § 1026.17(b) before-consummation rule in certain cases — see § 1026.19(a) for the residential-mortgage early disclosure timing. Not separately re-retrieved this run; needs_verification.)
A non-purchase-money refinance or equity transaction secured by the home (e.g., a later wrap/refi of an existing CFD that pulls cash out and is not acquisition financing) can fall outside the § 1026.23(f)(1) exemption and restore the rescission right. The line is whether the security interest finances acquisition/initial construction versus something else.

5. High-cost mortgages (HOEPA) — the high-rate / high-fee CFD overlay

The most aggressive seller-financed CFDs — high stated rates, large fees — can cross into high-cost mortgage territory under HOEPA (TILA §§ 1602(bb), 1639; Reg Z § 1026.32), which layers substantial extra duties and bans on top of ordinary disclosure. A closed-end consumer-credit transaction secured by the consumer’s principal dwelling is a high-cost mortgage if it crosses any of three triggers (12 C.F.R. § 1026.32(a)(1); retrieved https://www.law.cornell.edu/cfr/text/12/1026.32, 2026-06-08):

APR trigger — APR exceeds the average prime offer rate (APOR) by more than 6.5 percentage points (first-lien); 8.5 points (first-lien where the dwelling is personal property and the loan is under $50,000, e.g. many unaffixed manufactured-home CFDs); or 8.5 points (subordinate lien);
Points-and-fees trigger — total points and fees exceed 5% of the loan amount (transactions ≥ $20, 000), or t h e l essero f * * 8$ 1,000** (under $20,000; the dollar figures adjust annually by CPI); or
Prepayment-penalty trigger — a prepayment penalty that can be charged more than 36 months after consummation, or that can exceed 2% of the amount prepaid.

Exemptions (§ 1026.32(a)(2)): reverse mortgages, initial construction financing, certain Housing Finance Agency loans, and USDA §502 Direct loans. A seller-financed home-acquisition CFD fits none of these exemptions, so a high-rate CFD on a principal dwelling can be a HOEPA high-cost mortgage — which brings mandatory pre-closing warnings, a ban on balloon payments (with narrow exceptions), a ban on prepayment penalties, and an ability-to-repay determination. The detailed HOEPA restriction set (§§ 1026.32(c)–(d), 1026.34) was not exhaustively re-retrieved this run beyond the coverage triggers — needs_verification. The personal-property / sub-$50k 8.5-point trigger is especially relevant because so many CFDs finance manufactured housing at high rates and low balances. Source: 12 C.F.R. § 1026.32(a).

6. The loan-originator and ability-to-repay overlays (cross-reference)

TILA’s disclosure duty is the floor. Two further Reg Z regimes — both enacted through TILA by the Dodd-Frank Act — can attach to the same CFD and are covered in depth on their own page, dodd-frank-seller-financing:

Loan Originator Rule, § 1026.36 (statutory basis TILA § 129B, 15 U.S.C. § 1639b) — compensation, steering, and qualification rules, with the seller-financer exclusions at § 1026.36(a)(4) (≤ 3 properties) and (a)(5) (≤ 1 property). The balloon split lives here: a balloon is allowed under the one-property exclusion but defeats the three-property exclusion.
Ability-to-Repay / Qualified Mortgage Rule, § 1026.43 (statutory basis TILA § 129C, 15 U.S.C. § 1639c) — “covered” dwelling-secured transactions require a reasonable, good-faith ability-to-repay determination on eight underwriting factors. There is no seller-financer exemption inside § 1026.43, so a high-volume CFD seller who is a Reg Z creditor owes ATR regardless of the LO-Rule carve-outs.

Separately, SAFE Act MLO licensing (safe-act-mlo) asks the different question of whether the individual must hold a state mortgage-loan-originator license to originate the CFD at all. All three sit on top of TILA’s disclosure duty; an operator must clear each independently.

7. Enforcement and remedies

TILA is privately enforceable: a consumer may recover actual damages, statutory damages, and costs and a reasonable attorney’s fee for disclosure violations (TILA § 130, 15 U.S.C. § 1640), and the CFPB and other regulators enforce administratively. Where rescission is available (the non-acquisition cases in § 4), an uncured material-disclosure failure can extend the rescission window to up to three years (§ 1026.23(a)(3)). The exact statutory and per-violation damage amounts under § 1640, and the current CFPB CFD-enforcement docket (the 2016-present predatory-CFD wave, including the Harbour Portfolio line of state-AG/CFPB actions referenced in CLAUDE.md’s landmark anchors), were not retrieved verbatim this run — see needs_verification; do not quote a dollar figure or a specific consent order from memory.

▸ For Sellers / Operators — The compliance-critical facts, in order: (1) Count your deals. Six or more dwelling-secured CFDs in a calendar year makes you a Reg Z creditor (§ 1026.2(a)(17)(v)) who owes the full § 1026.18 disclosure set — APR, finance charge, payment schedule, total of payments, and (because a CFD is a credit sale) the total sale price — delivered in writing before the buyer signs (§ 1026.17(a)–(b)). There is no small-seller exemption from the disclosure duty itself; the famous ≤ 1 / ≤ 3 carve-outs are from the LO Rule (dodd-frank-seller-financing), a different question. (2) Get the APR right. A misstated APR or finance charge is the classic TILA claim and is privately enforceable for statutory damages plus fees (§ 1640); it also interacts with state usury-and-interest-caps. (3) Watch HOEPA. A high stated rate (more than ~6.5 points over APOR first-lien, or 8.5 points on a sub-$50k manufactured-home deal) or fat fees (>5%) turns the CFD into a high-cost mortgage with balloon/prepayment bans and a mandatory ATR (§ 1026.32). Manufactured-home CFDs are the high-risk zone. (4) Layer the rest: the LO Rule and ATR/QM (dodd-frank-seller-financing), SAFE Act MLO licensing (safe-act-mlo), and your state §4 overlay, which can be stricter than this federal floor. Disclose fully, fix the APR math, avoid high-cost triggers, paper it before signing.

▸ For Buyers — If your home CFD came from a seller who finances multiple homes a year, you were likely entitled to written TILA disclosures before you signed — the APR, the total finance charge, the full payment schedule, and the total sale price. You generally do not get a three-day rescission right on a purchase-money CFD (it is a “residential mortgage transaction,” § 1026.23(f)(1)), but a missing or wrong disclosure can still support damages and attorney’s fees under § 1640. If the deal is high-rate or high-fee, ask whether it is a high-cost (HOEPA) mortgage, which would have entitled you to extra warnings and an ability-to-repay determination.

Linked from: every jurisdictions/<state>.md §4 (Federal Overlay), alongside dodd-frank-seller-financing and safe-act-mlo. Cross-links: dodd-frank-seller-financing · safe-act-mlo · garn-st-germain-due-on-sale · irc-453-installment-sale · usury-and-interest-caps · installment-land-contract · equitable-title · notice-and-cure

Jurisdiction interaction

TILA/Reg Z is a uniform federal floor that applies in all 56 jurisdictions identically — it is not a state-by-state split. What varies is the state CFD disclosure statute that stacks on top, recorded in each jurisdiction page’s §4 Federal Overlay and §1 Formation & Mandatory Disclosures modules. States with their own robust pre-signing CFD disclosure regimes (e.g. texas executory- contract notices, minnesota, maryland, illinois) require operators to satisfy both the federal § 1026.18 disclosures and the state form; a state-law-compliant CFD that omits the TILA disclosures still violates federal law, and vice versa. The federal disclosure duty does not displace the stricter state duty, and the stricter state duty does not satisfy the federal one.

Primary sources (retrieved 2026-06-08)

15 U.S.C. § 1601(a) — TILA purpose: “meaningful disclosure of credit terms.” https://www.law.cornell.edu/uscode/text/15/1601
15 U.S.C. § 1602 — definitions: (g) “creditor” (regularly extends; >4 installments or finance charge); (i) “consumer”; (w) “dwelling”; (x) “residential mortgage transaction” (names “installment sales contract”). https://www.law.cornell.edu/uscode/text/15/1602
12 C.F.R. § 1026.1(a), (c) — Reg Z authority (implements 15 U.S.C. 1601 et seq.) and four-part coverage trigger. https://www.law.cornell.edu/cfr/text/12/1026.1
12 C.F.R. § 1026.2 — (a)(11) “consumer”; (a)(12) “consumer credit”; (a)(16) “credit sale” (“a sale in which the seller is a creditor”); (a)(17)(v) “creditor” numeric test (“more than 5 times for transactions secured by a dwelling”); (a)(19) “dwelling”; (a)(24) “residential mortgage transaction.” https://www.law.cornell.edu/cfr/text/12/1026.2
12 C.F.R. § 1026.17(a)–(b) — disclosures clear, conspicuous, in writing, grouped/segregated, before consummation. https://www.law.cornell.edu/cfr/text/12/1026.17
12 C.F.R. § 1026.18 — closed-end disclosure content: (a) creditor, (b) amount financed, (c) itemization, (d) finance charge, (e) APR, (f) variable rate, (g) payment schedule, (h) total of payments, (j) total sale price (credit sales), (k) prepayment, (l) late payment, (m) security interest, (s) payment/balloon summary. https://www.law.cornell.edu/cfr/text/12/1026.18
12 C.F.R. § 1026.19(e)(1)(i) — TRID Loan Estimate / Closing Disclosure scope: “closed-end consumer credit transaction secured by real property or a cooperative unit, other than a reverse mortgage.” https://www.law.cornell.edu/cfr/text/12/1026.19
12 C.F.R. § 1026.23(a), (f)(1) — right of rescission; exemption for “a residential mortgage transaction.” https://www.law.cornell.edu/cfr/text/12/1026.23
12 C.F.R. § 1026.32(a)(1)–(2) — HOEPA high-cost-mortgage triggers (APR-over- APOR 6.5 / 8.5 points; points-and-fees 5% / lesser of 8% or $1,000; prepayment penalty), and exemptions (reverse, construction, HFA, USDA §502). https://www.law.cornell.edu/cfr/text/12/1026.32

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