Contract4Deed Wiki

Building a Compliant Disclosure Package

14 min read

Building a Compliant Disclosure Package

Legal information, not legal advice. This is an operational playbook for a contract-for-deed seller/operator assembling the disclosure package that must accompany an installment land contract. Every step still cites the controlling authority and links the relevant concept, jurisdiction, or federal page. The authoritative statement for any single jurisdiction is that jurisdiction’s page and its cited statute — start from the 50-state-mandatory-disclosure-table.

▸ For Sellers / Operators. A contract-for-deed disclosure failure is not a paperwork foot-fault — across the states it is the single most common path to rescission, return of every payment made, treble/consumer-fraud damages, and fee-shifting (e.g. texas §5.069(d) cancel-and-rescind; minnesota §559A.05 rescission + all payments; iowa §558.71 one-year rescission; illinois Consumer Fraud Act exposure). Two layers apply at once: the state CFD/seller-disclosure statute and the federal truth-in-lending-cfd disclosures if you cross the Reg Z creditor volume test. Clearing one layer does not excuse the other.

▸ For Buyers. Most of the items below exist for you — the tax/lien status, the amortization schedule, the “this is NOT a mortgage” warning, and the annual accounting. A missing disclosure is frequently the buyer’s strongest claim; notice-and-cure and the equitable-title doctrines (equitable-title, substantial-equity-doctrine) often turn on what the seller did or did not disclose.

The two-layer model

A compliant package is two stacked checklists, and you must satisfy whichever of each applies to your deal:

  1. State CFD-disclosure layer — keyed to the installment-land-contract instrument itself (or a general residential property-condition act that expressly reaches installment sales). Roughly 16 jurisdictions impose a CFD-specific mandate and ~17 more reach CFDs through a general act; see the tallies in 50-state-mandatory-disclosure-table.
  2. Federal Reg Z / TILA layer — keyed to the credit you are extending, not to the CFD label. Triggered by the creditor volume test (more than 5 dwelling-secured extensions in a calendar year, 12 C.F.R. § 1026.2(a)(17)(v), https://www.law.cornell.edu/cfr/text/12/1026.2). See truth-in-lending-cfd and the seller-financer exclusions in dodd-frank-seller-financing.

The package below is organized by what gets disclosed. For each category it states the model statutory requirement, the jurisdictional spread, and the penalty for omission — then the operator step that satisfies it.

Step 1 — Tax status (assessed value, delinquency, who pays going forward)

What to disclose. The property’s tax status is a near-universal disclosure item in CFD-specific regimes, because the buyer takes possession but the seller holds record title — the buyer needs to know whether taxes are current and who carries them.

  • texas — before signing, the seller must furnish a tax certificate from each applicable taxing unit (Tax Code § 31.08), which discloses any ad valorem delinquency. Tex. Prop. Code § 5.070, https://texas.public.law/statutes/tex._prop._code_section_5.070.
  • iowa — the § 558.70 disclosure statement must set forth current assessed value and property taxes / special assessments due, delinquent, or the subject of a tax-sale certificate. Iowa Code § 558.70(1), https://www.legis.iowa.gov/docs/code/558.70.pdf.
  • colorado — the seller must designate the public-trustee tax-escrow and give notice of the transfer to the county treasurer plus a transfer declaration to the assessor (within 90 days). C.R.S. § 38-35-126(2)–(3).
  • florida — a general property-tax disclosure summary is statutorily required on the conveyance instrument. Fla. Stat. § 689.261.

Penalty for omission. In Texas, omission of a § 5.069/§ 5.070 item is a DTPA violation supporting cancel-and-rescind + return of all payments, § 5.069(d) (subject to mutual restitution, morton-v-nguyen-2013). In Iowa, a § 558.70 omission supports rescission or a money judgment within one year, § 558.71. In Colorado, the buyer may void and recover all payments + statutory interest within a 7-year window, § 38-35-126.

Operator step. Pull a current tax certificate / treasurer’s statement for every taxing unit before execution, attach it to the package, and state in the contract who pays taxes during the term (see the property-tax-allocation trap in property-tax-default-on-cfd).

Step 2 — Liens, mortgages, and encumbrances (and the “is there a wrap?” problem)

What to disclose. Because the seller keeps record title, an existing mortgage or lien on the property is senior to the buyer’s equitable-title and can wipe the buyer out on the seller’s default. Disclosure of encumbrances is the most heavily penalized category in several states.

  • iowa — a complete description of all mortgages/liens (holder, address, balance, due date). Iowa Code § 558.70(1).
  • texas — legible copies of any document describing a lien, encumbrance, restrictive covenant, or easement affecting title, plus statutory all-caps advice to obtain a title commitment reviewed by an attorney and an owner’s title policy. Tex. Prop. Code § 5.069, https://texas.public.law/statutes/tex._prop._code_section_5.069.
  • kansas — the seller must hold clear title or disclose the encumbrance to the buyer (and disclose the CFD to the lienholder, and release the lien by final payment). K.S.A. 58-5203 (L. 2024), https://www.ksrevisor.gov/statutes/chapters/ch58/058_052_0003.html.
  • nevada — written disclosure of encumbrances or conditions affecting title is a required term; failure is a deceptive trade practice. NRS 598.0923(1)(f).
  • indiana — a separate land-contract encumbrance notice must be sent by certified mail. IC 24-9-3-7(d).
  • north-carolina — § 47H-2(b) requires disclosure of public-record matters and a 14-point lien warning (§ 47H-6). N.C.G.S. §§ 47H-2, 47H-6.

Penalty for omission. Kansas: a § 58-5203 violation is a KCPA deceptive act — civil penalty up to 5,000 per willful violation, plus treble damages and criminal penalties, NRS § 598.0999. North Carolina: damages or rescission with return of payments, § 47H-8 / § 47H-6.

Operator step. Run title before listing. If there is an underlying loan, you are in wrap-around-mortgage / underlying-mortgage-wrap territory: disclose it, map the due-on-sale-clause exposure under garn-st-germain-due-on-sale, and read cfd-on-property-with-existing-mortgage and wrap-around-due-on-sale-trigger before you sign. A senior lien you fail to disclose is both a disclosure violation and a fraud/UDAP claim.

Step 3 — Property condition

What to disclose. Where no CFD-specific statute exists, the general residential property-condition disclosure act is frequently the only mandatory disclosure — and many of those acts expressly reach installment sales / land contracts.

  • texas — § 5.069 includes a property-condition notice.
  • washington — the disclosure act expressly states that “the transfer of a vendee’s interest under a real estate contract is subject to this chapter” (Form 17). RCW §§ 64.06.010, .020.
  • new-york — the Property Condition Disclosure Act (RPL art. 14) expressly includes installment land sale contracts (1–4 family). N.Y. RPL §§ 461, 462.
  • idaho — the Property Condition Disclosure Act expressly covers installment-sale contracts. Idaho Code § 55-2504.
  • wisconsin — ch. 709 Real Estate Condition Report applies to transfer “by sale, exchange, or land contract.” Wis. Stat. § 709.02.
  • south-carolina, tennessee, rhode-island, michigan — general acts that reach installment/land-contract transfers (see the table).

Penalty for omission. These range from a rescission window (Washington: 3 business days, RCW § 64.06.030; Wisconsin: 2 business days, § 709.05; New York pre-2024 had a $500 credit, now actual damages for willful failure, RPL § 465) to damages only (Idaho § 55-2517; South Carolina § 27-50-65; Tennessee § 66-5-208). In caveat-emptor states with no condition-disclosure statute (alabama, wyoming, vermont, arkansas), the residual exposure is common-law fraud / UDAP, not a statutory penalty — but a known latent defect duty can still apply (e.g. florida: Johnson v. Davis, Fla. Stat. § 689.261).

Operator step. Deliver the state’s prescribed condition form (Form 17 in WA, the RPL §462 verbatim form in NY, etc.) on the offer, and keep the signed acknowledgment. Where the state has no form, still deliver a written condition disclosure — it is cheap insurance against a fraud claim.

Step 4 — The financial terms (price, rate, amortization, balloon)

What to disclose. This is where the state CFD statute and the federal truth-in-lending-cfd layer overlap most. Both want the buyer to understand the cost of the carry.

State CFD-specific financial disclosures (examples):

  • illinois — § 67/10 content list: price, APR, balloon, tax values, full amortization, and tax/insurance/repair allocation, plus the AG disclosure form and a 3-day cooling-off period. 765 ILCS 67/10.
  • iowa — a full amortization schedule and any balloon payment. Iowa Code § 558.70(1).
  • delaware — a complete amortization schedule with per-payment principal/interest and running balance; stated principal exclusive of interest. 25 Del. C. § 314.
  • minnesota — investor sellers must disclose a balloon-payment disclosure, essential terms, an amortization schedule, and the investor seller’s own acquisition price and date. Minn. Stat. § 559A.03, https://www.revisor.mn.gov/statutes/cite/559A.03.
  • ohio (§ 5313.02), maryland (§ 10-103), north-carolina (§ 47H-2), maine (§ 482) — all prescribe itemized financials + rate.

The federal § 1026.18 layer (if you are a Reg Z creditor — more than 5 dwelling-secured extensions/yr): creditor identity (a), amount financed (b), itemization (c), finance charge (d), APR (e), payment schedule (g), total of payments (h), total sale price (j — CFD-specific), prepayment (k), late charge (l), security interest (m), and balloon/payment summary (s). 12 C.F.R. § 1026.18, https://www.law.cornell.edu/cfr/text/12/1026.18; delivered “before consummation,” § 1026.17(a)–(b), https://www.law.cornell.edu/cfr/text/12/1026.17. For most real-property-secured deals these flow through TRID — the Loan Estimate (§ 1026.19(e)) and Closing Disclosure (§ 1026.19(f)), https://www.law.cornell.edu/cfr/text/12/1026.19.

Penalty for omission. Illinois: Consumer Fraud Act violation — actual damages, fees, punitives, non-waivable (765 ILCS 67/85). Minnesota: rescission + all payments (− rental) + improvements + damages + fees within 2 years, or $5,000 statutory damages, § 559A.05. Federal TILA: statutory damages, actual damages, and fees under 15 U.S.C. § 1640; a mis-stated APR is the classic TILA violation. Note the interaction with state usury-and-interest-caps — the rate you disclose must also be legal.

Operator step. Produce one amortization schedule that does double duty for the state schedule requirement and the § 1026.18(g)/(h) payment disclosures. Surface any balloon-payment conspicuously (a balloon can also blow the Dodd-Frank ≤ 3-property seller-finance exclusion — see dodd-frank-seller-financing and the dodd-frank-exclusion-decision-tree). Watch the manufactured-home edge case: an unaffixed home can be dwelling-secured but not real-property-secured, so § 1026.18 applies but TRID may not (manufactured-mobile-home-cfd).

Step 5 — The “this is NOT a mortgage” and cure-rights warnings

What to disclose. Several reform statutes require a conspicuous statement explaining that the instrument is not a mortgage and that the buyer’s cure / forfeiture posture differs from a foreclosure.

  • minnesota — a “WHAT ARE YOU GETTING INTO” disclosure stating that “A contract for deed is NOT a mortgage,” non-waivable. Minn. Stat. § 559A.03, https://www.revisor.mn.gov/statutes/cite/559A.03.
  • maine — a “not-a-mortgage” statement and a cure-rights statement among the § 482 ¶¶A–Q items. 33 M.R.S. § 482.
  • iowa — a forfeiture warning and a notice of the right to counsel. Iowa Code § 558.70(1).
  • north-carolina — disclosure of cure rights and a 3-day cancellation notice. N.C.G.S. § 47H-2.

Penalty for omission. Minnesota: § 559A.05 rescission/damages. Maine: no express per-violation penalty (a documented statutory gap), though anti-evasion § 483 and foreclosure-not-forfeiture § 6203-F plus UTPA fill in. Iowa: § 558.71 rescission/judgment. This warning is what ties the disclosure package to the remedy regime — read forfeiture-vs-foreclosure, statutory-cancellation, notice-and-cure, and reinstatement-right so the warning you give matches the remedy your state actually allows.

Operator step. Use the state’s exact prescribed language where it exists (Minnesota and Maine prescribe content; copying it verbatim removes argument).

Step 6 — Payoff / balance on demand (the conversion and refinance moment)

What to disclose. A buyer who wants to refinance, sell, or convert to recorded title needs an accurate payoff figure. Some states make the balance available on demand; the federal layer adds a payoff-statement duty for covered loans.

  • pennsylvania (Phila. & Allegheny Co.) — on the buyer’s request, the seller must provide the balance, an itemization, and receipts; after a 30-day demand failure the buyer may terminate and recover all payments. 68 P.S. § 907.
  • texas — the buyer may convert to recorded title at any time without penalty (§ 5.081), and the early-payoff path carries no prepayment penalty. Tex. Prop. Code § 5.081, https://texas.public.law/statutes/tex._prop._code_section_5.081.
  • Federal — for a covered closed-end mortgage, the servicer must give an accurate payoff statement within a reasonable time (generally 7 business days) of a request. 12 C.F.R. § 1026.36(c)(3), https://www.law.cornell.edu/cfr/text/12/1026.36. Whether this binds a given CFD seller turns on the same Reg Z creditor/servicer coverage analysis as the rest of the federal layer — confirm deal-by-deal (see needs_verification).

Penalty for omission. Pennsylvania (Phila/Allegheny): terminate + recover all payments, § 907. Federal: TILA statutory/actual damages under 15 U.S.C. § 1640 where § 1026.36(c)(3) applies.

Operator step. Maintain a running payoff ledger you can produce on 7 days’ notice. The amortization schedule from Step 4 should make the payoff figure mechanical. See seller-carryback-financing and novation-and-assignment for the refinance/assignment mechanics.

Step 7 — The annual accounting statement (the recurring duty, not a one-time disclosure)

What to disclose. Texas is the model: a yearly written accounting during the life of the contract — distinct from the pre-sale disclosures above.

Penalty for omission. A seller of fewer than two transactions / 12 months owes 250 per day after Jan. 31, capped at the property’s fair market value, plus fees. § 5.077. The Texas Supreme Court held these are a statutory penalty requiring no proof of actual harm — flores-v-millennium-interests-2005. For a programmatic operator the $250/day exposure compounds fast; it is the most mechanical disclosure penalty in the country.

Operator step. Calendar a January batch run of § 5.077 statements for every active Texas contract and keep postmark proof. (Most states do not impose a standalone annual-statement duty — confirm whether your state does before relying on Texas as a template; flagged under needs_verification.)

Step 8 — Form, timing, recording, and delivery (getting the package to the buyer)

A correct package delivered late or unrecorded can still trigger the penalty:

Operator step. Build a closing checklist that gates execution on (a) all Step 1–6 disclosures delivered and acknowledged, (b) the prescribed form used, (c) the required pre-execution waiting period observed, and (d) a calendar entry for recording within the state deadline. Then add the recurring Step 7 calendar entry.

Cross-references

needs_verification

  • Whether 12 C.F.R. § 1026.36(c)(3) payoff-statement timing binds a specific CFD seller depends on the Reg Z creditor/servicer coverage analysis for that deal; not independently confirmed for the occasional (≤5/yr) seller.
  • The precise TRID vs. § 1026.18 model-form boundary for an unaffixed manufactured-home CFD (dwelling-secured but possibly not real-property-secured) is fact-specific and turns on state affixation law.
  • Whether any state other than Texas imposes a standalone annual-accounting duty (as opposed to payoff-on-demand) was not located in the source pages this run; do not assume the Texas § 5.077 template applies elsewhere.
  • Maine § 482’s lack of an express per-violation penalty is noted as a statutory gap on the maine page; the operative consequence (UTPA/anti-evasion) is inferential, not a stated penalty.

Disclaimer. This page is legal information, not legal advice, and may be out of date. Contract-for-deed disclosure statutes are frequently amended (Minnesota, Kansas, Illinois, and New York have all reformed since 2017), the federal Reg Z coverage analysis is fact-specific, and the application of a general property-condition act to a particular installment land contract can be contested. Verify every cited statute against the linked jurisdiction page and its primary source, and consult a licensed attorney in the relevant jurisdiction before assembling, delivering, or relying on a disclosure package.

Graph View