Operator Compliance Checklist (Pre-Contract, by State)
Legal information, not legal advice. This is an operational checklist, but every step still cites primary authority and links the controlling state, concept, and federal page. Confirm each item against the linked jurisdiction page and its cited statute/case before you sign anything — contract-for-deed law is amended often. Last verified: 2026-06-08.
This page is the pre-contract gate every contract-for-deed (CFD) / installment land-contract operator should clear before execution, in the order that the exposure bites. It does not draft your contract — it tells you the five things about the deal’s jurisdiction and structure that decide whether the contract is enforceable, recordable, and forfeitable, and routes each to the reference table and the state page that holds the operative law.
The checklist is deliberately sequenced so that a deal-killer surfaces early:
- Remedy regime — can you forfeit on default, or must you foreclose/cancel?
- Mandatory disclosures — what must the contract contain or hand over, on pain of rescission?
- Recording deadline — must you record (and by when), and is recording a precondition to your remedy?
- Federal threshold — does Dodd-Frank/ATR/SAFE reach this deal, and which conditions attach?
- Usury cap — is the rate inside the state ceiling, or recharacterizable as a usurious loan?
▸ For Sellers / Operators — Steps 1, 3, and 4 are the ones that void a deal or strip your remedy. The single most common operator failure is treating a
treat_as_mortgageor statutory-bright-line state (texas, ohio, illinois, minnesota) as if a forfeiture clause will work — it will not once the buyer crosses the equity line (Step 1), and in several states an unrecorded contract cannot be cancelled at all (Step 3). Run all five steps before you take a payment.▸ For Buyers — every step below is also a buyer’s checklist of the protections you are owed: a non-forfeitable equity stake (Step 1), the disclosures and cooling-off rights you must receive (Step 2), the seller’s duty to record so your equitable title is perfected (Step 3), and the rate ceiling your payments cannot exceed (Step 5).
Step 0 — Classify the deal before you classify the state
Three facts about the deal change which rules even apply. Capture them first:
- Is the collateral a “dwelling” sold to a consumer for personal use? The federal overlay (Steps 4) only reaches closed-end consumer credit secured by a dwelling (12 C.F.R. § 1026.43(a); § 1026.36(b)). Raw land with no residence, an entity buyer, or a genuine business-purpose deal falls outside both the Loan Originator Rule and the Ability-to-Repay rule. Source: 12 C.F.R. § 1026.43(a) — https://www.law.cornell.edu/cfr/text/12/1026.43 (retrieved 2026-06-08). See dodd-frank-seller-financing and the dodd-frank-exclusion-decision-tree.
- Is there an underlying mortgage you are wrapping? If yes, you have a due-on-sale problem (Step 4) and likely an over-encumbrance prohibition in several states — see wrap-around-mortgage, underlying-mortgage-wrap, due-on-sale-clause, and the edge case wrap-around-due-on-sale-trigger.
- Is the home a manufactured/mobile unit? Title, perfection, and even the remedy can shift if the home is titled as personal property — see manufactured-mobile-home-cfd.
These three switches decide which of the steps below are live for your deal.
Step 1 — Confirm the remedy regime (can you forfeit on default?)
Why first: the remedy regime determines whether your contract’s forfeiture
clause is worth anything. In a treat_as_mortgage state it is categorically
unenforceable; in a statutory-bright-line state it dies the moment the buyer
crosses a paid-in threshold; in a statutory_cancellation state you must run the
state’s exclusive notice procedure, not self-help.
Do this:
- Look up the deal’s jurisdiction in the 50-state-remedy-regime-table and
read the
Remedy RegimeandSubstantial-Equity Barcolumns. - Open the linked state page §3 / §3b for the controlling authority and the exact mechanics.
- Reconcile the contract’s default clause against the regime and against the two
national anchors every state is measured against:
- skendzel-v-marshall-1973 — Skendzel v. Marshall, 301 N.E.2d 641 (Ind. 1973): a forfeiture clause is unenforceable against a buyer with substantial equity; the seller must foreclose the contract like a mortgage.
- sebastian-v-floyd-1979 — Sebastian v. Floyd, 585 S.W.2d 381 (Ky. 1979): an installment land contract is treated as a mortgage; forfeiture is not available at all.
The four regimes and what they mean operationally (see forfeiture-vs-foreclosure for the doctrine):
| Regime | Your default remedy | Operator consequence |
|---|---|---|
strict_forfeiture | Bargained-for forfeiture enforced per terms (still policed for unconscionability/penalty) | Forfeiture viable, but draft as enforceable liquidated damages. Only missouri, new-mexico, wyoming. |
statutory_cancellation | Run the state’s exclusive statutory notice-and-cure / cancellation | No self-help; honor the prescribed form and period. arizona, iowa, louisiana, minnesota, north-dakota. |
treat_as_mortgage | Foreclose the buyer’s equity of redemption; forfeiture unavailable | Budget for judicial foreclosure timeline and possible deficiency rules. ~19 states incl. florida, kentucky, oklahoma, pennsylvania, new-york. |
hybrid | Two tracks; forfeiture below an equity line, foreclosure/sale above it (or seller’s election) | Know the line. Crossing it flips your remedy — this is the classic trap. |
The bright-line equity bars to memorize (these flip a hybrid state into foreclosure/sale; from the 50-state-remedy-regime-table):
| State | Statutory threshold | Above it | Authority (confirm on page) |
|---|---|---|---|
| texas | 40% equity OR 48 payments (or recorded) | Forfeiture barred → trustee’s sale + 60-day cure | Tex. Prop. Code § 5.066 |
| ohio | 5 years in effect OR 20% paid | Mandatory judicial foreclosure | ORC § 5313.07 |
| illinois | 20% paid (residential, post-7/1/1987) | IMFL foreclosure | 735 ILCS 5/15-1106(a)(2) |
| michigan | 50% paid | Post-judgment redemption 6 mo. (vs. 90 days) | MCL 600.5744 |
| washington | court-ordered (no fixed %) | Court may order substantial-equity sale | RCW 61.30.120 |
| vermont | statutory (no fixed %) | Court “shall [not]” forfeit substantial equity → judicial sale | 12 V.S.A. § 4945 |
Honesty marker. Five jurisdictions — american-samoa, district-of-columbia, massachusetts, northern-mariana-islands, us-virgin-islands — carry an
unclearregime: no retrieved statute or controlling case classifies the default remedy. Do not assume forfeiture is available there. Treat the remedy as unsettled and get local counsel before drafting a forfeiture clause. See the table’s needs_verification notes.
Cure-period sub-step. In every statutory_cancellation and most hybrid
states there is a fixed notice-and-cure / cancellation period you must honor
before the buyer’s interest is extinguished. Pull it from the
50-state-cure-period-table and the notice-and-cure and
reinstatement-right concepts. Examples (confirm on page): minnesota 60
days (90 for investor sellers under ch. 559A) — Minn. Stat. § 559.21;
north-dakota 1 year (6 months if >66⅔% still owed) — N.D.C.C. § 32-18-04;
iowa 30 days — Iowa Code § 656.4; washington ≥90 days from recording —
RCW 61.30.070; texas 30-day cure under § 5.065.
Step 2 — Confirm and assemble the mandatory disclosures
Why: a missing statutory disclosure is frequently a rescission / void trigger or a damages multiplier — the buyer recovers everything paid, sometimes with interest and fees, sometimes regardless of fault. This is a contract-killer, not a foot-fault.
Do this:
- Look up the jurisdiction in the 50-state-mandatory-disclosure-table —
read
CFD-specific mandate?,Disclosed items,Form prescribed?, andPenalty for omission. - Open the state page §1 (Formation & Mandatory Disclosures) for the exact contents and timing.
- Layer the general residential property-condition disclosure act on top where the state has no CFD-specific statute but its general act reaches installment sales (the table flags these as “General act only”).
The states with teeth — CFD-specific disclosure regimes that void or refund (from the disclosure table; confirm exact text on the state page):
| State | What must be disclosed / done | Penalty for omission | Authority |
|---|---|---|---|
| texas | §§ 5.069/5.070 pre-execution condition, financing, tax & insurance disclosures; § 5.072 makes oral agreements unenforceable; § 5.077 annual accounting statement | Statutory damages + buyer remedies under Subchapter D | Tex. Prop. Code §§ 5.069, 5.070, 5.072, 5.077 |
| illinois | § 67/10 extensive content list (price, APR, balloon, tax values, amortization, allocations) + AG disclosure form + 3-day cooling-off | Consumer Fraud Act: actual damages, fees, punitives; non-waivable | 765 ILCS 67/10, 67/70, 67/85 |
| iowa | § 558.70 disclosure statement (assessed value, taxes, liens, full amortization, balloon, rate, forfeiture warning, right to counsel) | Within 1 yr: rescind or money judgment + fees | Iowa Code §§ 558.70, 558.71 |
| california | In-contract term + tax-estimate basis; Subdivision Map Act compliance; over-encumbrance and payment-misappropriation prohibitions | Recover all paid + 9% + $500 + fees, or void; willful = misdemeanor | Cal. Civ. Code §§ 2985.5, 2985.51 (also §§ 2985.2, 2985.3) |
| delaware | Complete amortization schedule (per-payment P&I + balance); unimproved-land notice | Contract voidable by either party before settlement | 25 Del. C. § 314(a)–(f) |
| colorado | Public-trustee tax-escrow designation; transfer notices to treasurer/assessor within 90 days | Buyer may void; return of all payments + interest + fees (7-yr window) | C.R.S. § 38-35-126(2)–(3) |
| indiana | Sales Disclosure form + land-contract encumbrance notice by certified mail | Form: knowledge-gated; encumbrance notice: Home Loan Practices remedies | IC 32-21-5-7/-10; IC 24-9-3-7(d) |
No CFD-specific statute ≠ no duty. In
No/ “general act only” states, you still face the general residential condition-disclosure act (where it reaches installment sales) and common-law fraud / UDAP exposure for material nondisclosure. E.g. florida imposes a common-law latent-defect duty under johnson-v-davis-1985 even with no CFD disclosure statute. Confirm on the state page §1.
Step 3 — Confirm the recording deadline and whether recording is a precondition
Why: in most states recording is permissive but priority-protective — the buyer should record a memorandum to perfect its equitable-title against the seller’s later grantees and creditors (recording-and-priority). But in a minority of states recording is mandatory with a deadline, and in some it is a precondition to the seller’s own remedy — fail to record and you cannot cancel the contract on default.
Do this:
- Look up the jurisdiction in the 50-state-recording-requirement-table —
read
Mandatory?,Deadline,Who records, andEffect of non-recording. - Calendar the deadline from execution before you sign.
- If the table marks recording Conditional, treat recording as a gate on your remedy, not optional hygiene.
The mandatory / conditional-recording jurisdictions (record by the deadline or lose the deal or the remedy; from the recording table):
| State | Deadline | Who | Bite for non-compliance |
|---|---|---|---|
| north-carolina | 5 business days | seller (pays fee) | hard statutory duty; memorandum contents prescribed (G.S. § 47H-2(d); contents in § 47H-2(b)) |
| illinois | 10 business days | seller | buyer may rescind and recover all money paid until recorded |
| maryland | 15 days | vendor | purchaser’s unconditional right to cancel until recorded |
| maine | 20 days | vendor (at purchaser’s expense) | priority loss; memorandum contents required (14 M.R.S.) |
| ohio | 20 days | vendor | record + file with county auditor (ORC § 5313.02(C)) |
| texas | 30 days | seller | recording duty under § 5.076(a); liability measured as under § 5.079 (capped $500/yr per § 5.076(b)); recording converts instrument into a vendor’s-lien deed, foreclose-only (§ 5.079(a)) |
| iowa | 90 days | seller | statutory penalty / forfeiture-bar |
| minnesota | 4 months | vendor | 2% of principal civil penalty; recording is a precondition to § 559.21 cancellation |
The conditional trap. minnesota is the sharpest: an unrecorded residential CFD cannot be cancelled under § 559.21 (subd. 4b) — your only statutory termination route is closed until you record. Confirm on the minnesota page and the recording table.
Everywhere else, recording is permissive — but advise the buyer to record a memorandum anyway to perfect priority, and never over-encumber the property beyond the balance due (over-encumbrance is a public offense in california (Cal. Civ. Code § 2985.2) and restricted in ohio (ORC § 5313.02(B)) and north-carolina (G.S. § 47H-6)). See underlying-mortgage-wrap.
Step 4 — Confirm the federal threshold (Dodd-Frank, ATR, SAFE)
Why: if the deal is consumer + dwelling-secured (Step 0), three independent federal gates apply, and clearing one does not clear the others. Use the dodd-frank-exclusion-decision-tree as the worksheet; the gates are:
Gate 1 — Loan Originator Rule seller-financer exclusion (12 C.F.R. § 1026.36)
Count the operator’s seller-financed properties in any rolling 12-month period:
- ≤ 1 property (natural person / estate / trust, owner, not a builder): qualifies under § 1026.36(a)(5). Conditions: no negative amortization (a balloon is allowed), fixed rate or ARM first adjusting after 5+ years with reasonable annual/lifetime caps, and no good-faith ability-to-repay determination is required by this exclusion.
- ≤ 3 properties (any person, owner, not a builder): qualifies under § 1026.36(a)(4) — but the conditions are stricter: the financing must be fully amortizing (so no balloon), the operator must make a good-faith ability-to-repay determination, and the same fixed/ARM-after-5-years rate structure applies.
- 4 or more properties in 12 months: no exclusion — the seller is a covered loan originator and must comply or use a licensed third-party MLO.
Source: 12 C.F.R. § 1026.36(a)(4), (a)(5) — https://www.law.cornell.edu/cfr/text/12/1026.36 (retrieved 2026-06-08). See dodd-frank-seller-financing.
The balloon/ATR cross-up — the most-missed federal point. The ≤1 exclusion lets you write a balloon and skip the ATR test; the ≤3 exclusion does not — it requires full amortization (no balloon) and an ATR determination. An operator who assumes “three or fewer = balloon OK” has the rule backwards. Source: compare § 1026.36(a)(5)(iii)(B) (negative-amortization bar only) with § 1026.36(a)(4)(iii)(A) (fully amortizing + ATR) — https://www.law.cornell.edu/cfr/text/12/1026.36 (retrieved 2026-06-08).
Gate 2 — Ability-to-Repay / Qualified Mortgage (12 C.F.R. § 1026.43)
There is no seller-financer exemption inside the ATR rule. If the operator is a Reg. Z creditor making a covered transaction (consumer, dwelling-secured), the operator “shall not make a loan … unless the creditor makes a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to its terms” (§ 1026.43(c)(1)). Whether a given operator is a “creditor” depends on transaction volume under Reg. Z § 1026.2(a)(17). Source: 12 C.F.R. § 1026.43(a), (c)(1) — https://www.law.cornell.edu/cfr/text/12/1026.43 (retrieved 2026-06-08). See truth-in-lending-cfd and dodd-frank-seller-financing.
Gate 3 — SAFE Act MLO licensing (12 U.S.C. §§ 5101–5103)
Separate from the C.F.R. exclusions: does the individual need a state mortgage loan originator license? The SAFE Act defines a loan originator as one who “takes a residential mortgage loan application” and “offers or negotiates terms … for compensation or gain” (12 U.S.C. § 5102). The statute sets no numeric property threshold; states draw their own seller-financer lines (commonly framed in the CFPB implementing rules as acting “in a commercial context and with some degree of habitualness or repetition”). Source: 12 U.S.C. § 5102 — https://www.law.cornell.edu/uscode/text/12/5102 (retrieved 2026-06-08). The “commercial context / habitualness” framing comes from the CFPB Reg. G/H commentary, not § 5102’s text — confirm the applicable state’s MLO carve-out on safe-act-mlo before relying on it.
Wrap sub-gate — Garn-St. Germain due-on-sale (12 U.S.C. § 1701j-3)
If you are wrapping an existing mortgage (Step 0), the lender may enforce a due-on-sale clause notwithstanding state law (§ 1701j-3(b)) when title transfers by “installment sale contract, land contract, [or] contract for deed” (12 C.F.R. § 191.2). The (d) exemptions that bar enforcement are narrow and residential (under-five-dwelling-unit property): death/joint-tenancy transfers (d)(3), transfers to a relative on death (d)(5), spouse/children becoming owners (d)(6), divorce decree (d)(7), inter vivos trust where the borrower stays a beneficiary (d)(8) — an arm’s-length CFD sale does not fit any of them. Source: 12 U.S.C. § 1701j-3(b),(d) — https://www.law.cornell.edu/uscode/text/12/1701j-3 (retrieved 2026-06-08); 12 C.F.R. § 191.2 — https://www.law.cornell.edu/cfr/text/12/191.2 (retrieved per garn-st-germain-due-on-sale). See wrap-around-due-on-sale-trigger.
Step 5 — Confirm the usury cap (is the rate lawful?)
Why: a usurious CFD can mean forfeiture of all interest, penalty multiples, voiding of the interest obligation, or — in criminal-usury states — prosecution.
Do this:
- Determine whether the carried balance is a bona fide credit sale (time-price differential — generally not interest, not usury) or a disguised loan a court will recharacterize and test against the cap. The time-price doctrine is the central exemption: Hogg v. Ruffner, 66 U.S. (1 Black) 115, 118–19 (1861) (a sale on credit at a higher time price “is not for the loan of money, or forbearance of a debt”). See usury-and-interest-caps.
- Identify the state ceiling and the real-estate / business-purpose exemption for the jurisdiction (many states raise or remove the cap for credit secured by real estate or for business-purpose credit). Read the state page §6 / §1 and usury-and-interest-caps.
- Confirm whether federal preemption lifts the state cap for a first-lien residential deal.
Honesty marker. The wiki does not yet carry a 56-jurisdiction usury-ceiling reference table; numeric per-state caps must be read off the state page and usury-and-interest-caps, and several state ceilings are flagged
needs_verificationon their pages. Do not quote a numeric cap without retrieving the current state statute — usury ceilings are amended frequently.
The one-page run sheet
For any deal, fill this in from the linked tables before execution:
| # | Question | Pull from | Answer to capture |
|---|---|---|---|
| 0 | Consumer + dwelling? Wrap? Manufactured? | dodd-frank-exclusion-decision-tree, manufactured-mobile-home-cfd | Which steps are live |
| 1 | Remedy regime + equity bar | 50-state-remedy-regime-table + state §3 | Can I forfeit? At what line does it flip? |
| 1b | Statutory cure period | 50-state-cure-period-table | Length + what it runs from |
| 2 | Mandatory disclosures | 50-state-mandatory-disclosure-table + state §1 | Contents, form, penalty for omission |
| 3 | Recording deadline | 50-state-recording-requirement-table | Deadline; is it a precondition to my remedy? |
| 4 | Federal threshold | dodd-frank-exclusion-decision-tree, dodd-frank-seller-financing, safe-act-mlo, garn-st-germain-due-on-sale | LO-Rule exclusion tier; ATR; MLO license; due-on-sale |
| 5 | Usury cap | usury-and-interest-caps + state §6 | Credit-sale vs. loan; state ceiling; preemption |
Related playbooks/edge cases to read alongside: forfeiture-vs-foreclosure, notice-and-cure, recording-and-priority, executory-contract, property-tax-default-on-cfd, intervening-seller-judgment-lien, seller-bankruptcy-mid-contract.
needs_verification
- Texas Subchapter D per-section text (§§ 5.069, 5.070, 5.072, 5.077): the section numbers and roles are cited across the existing texas page and the reference tables (with live source_urls there), but the live statute page was not re-retrieved this run (the Texas Legislature index page returned only navigation). Confirm the current text on texas and https://statutes.capitol.texas.gov/Docs/PR/htm/PR.5.htm before quoting exact language.
- Per-state usury ceilings: no 56-jurisdiction usury reference table exists yet;
numeric caps must be read off each state page, several of which flag the cap
needs_verification. Step 5 numbers were intentionally not asserted here. - SAFE Act “commercial context / habitualness” standard: this framing lives in the CFPB implementing regulations/commentary, not in 12 U.S.C. § 5102 itself; the precise state-by-state seller-financer MLO carve-out is on safe-act-mlo and was not separately re-retrieved this run.
unclear-regime jurisdictions (american-samoa, district-of-columbia, massachusetts, northern-mariana-islands, us-virgin-islands): no retrieved authority classifies the default remedy; Step 1 cannot be completed from the wiki alone for these — local counsel required.
Disclaimer. This page is legal information, not legal advice, and may be out of date. It is an operational checklist that points to primary law; it is not a substitute for verifying each cited statute, rule, and case in the relevant jurisdiction as of the deal date. Contract-for-deed statutes are frequently amended and outcomes turn on facts. Consult a licensed attorney in the relevant jurisdiction before drafting, recording, enforcing, or signing an installment land contract.