When should you use a real estate contract? What are the advantages and disadvantages of contracts as opposed to mortgages? These questions sometimes entail legal issues that only a licensed attorney should address. And for those scenarios, please consult with your attorney.
Basically, however, the advantage of a real estate contract is the ease of termination in the event of default. A defaulted real estate contract generally can be terminated without filing suit, is comparatively inexpensive to litigation, and much faster to resolve without going to court. There have been some cases where litigation was necessary even to terminate a contract and, as a result, we now have some case law. It seems that the "conscious of the court can be shocked", which could result in having to litigate, but a note or mortgage "gone bad" must always be foreclosed in a court of law unless the borrower will sign a "Deed in Lieu" of foreclosure.
Always get legal advice before accepting a Deed In Lieu!
Some people believe that the lack of statutory law for contracts is a weakness, and there is some merit to that position. However, if you want to sell us your real estate receivable, we will pay you more if it is a real estate contract instead of a note or mortgage.