Tennessee Realtor State Practice Exam

In a land contract, who retains the title to the property?

1. The buyer

2. The seller

3. The lender

4. The real estate agent

The correct answer is: The seller

In a land contract, the seller retains the title to the property while allowing the buyer to take possession and use it. This type of agreement is a distinctive financing method where the buyer makes periodic payments to the seller over a specified term. The seller maintains ownership until the buyer fulfills the payment obligations under the contract, at which point the title is transferred to the buyer. This approach serves as a form of seller financing, which can be especially useful in situations where traditional mortgage financing may not be available or practical for the buyer. The other parties mentioned—like the buyer, lender, or real estate agent—do not hold the title during the term of the land contract. The buyer, though having the right to possession, does not hold title until all terms are satisfied. The lender's role typically involves traditional financing arrangements rather than land contracts. The real estate agent facilitates the transaction but does not retain ownership or title to the property.