If you sold property in Indiana on a land contract, you can sell that contract for a lump sum of cash. This guide explains how Indiana handles land contracts, what a buyer will look at, and how a sale works.
I'm based in Madison, Indiana, and I buy Indiana land contracts. Here's what matters.
Short version: Indiana has no single land contract law. Courts often treat these contracts like mortgages. That affects your price, and so does how much your buyer put down.
Land contracts are common in Indiana
Indiana counties recorded more than 31,000 land contracts from 2005 to 2024, according to Pew. That's the sixth most of any state, even though Indiana is only the 17th largest. About 90% were for homes.
Pew also found these contracts are most common on lower-priced homes and on manufactured homes. If that sounds like your deal, you're in good company. Note buyers see a lot of them.
How Indiana treats land contracts
This is where Indiana is different from Ohio.
There's no one land contract law. Ohio has a whole chapter of law just for land contracts. Indiana doesn't. Pew notes the rules come from a mix of lending laws and court cases.
Courts often treat them like mortgages. The big case is Skendzel v. Marshall, decided by the Indiana Supreme Court in 1973. The court said a land contract can be treated like a mortgage instead of a simple sale. In plain terms, a seller often can't just cancel the contract and keep everything the buyer paid. Once a buyer has built up real equity, the seller usually has to go through foreclosure.
Forfeiture is still possible in some cases. It's mostly when the buyer has paid very little or walked away from the property. Many contracts spell out when foreclosure kicks in. Pew found that many recorded Marion County contracts set that point somewhere between 15% and 60% of the balance paid.
Recording isn't required, but it matters. Indiana doesn't force sellers to record land contracts. Most still do. A recorded contract puts the deal on public record and protects everyone. A buyer of your note will want it recorded before closing.
Other rules to know. Pew reports that Indiana sellers must disclose liens and claims on the title within the first 10 days, and can't charge a fee when the buyer pays off early. There's no cap on the interest rate.
Why this affects your price
A note buyer is buying your right to collect. They also take on the risk that the payer stops paying. In Indiana, getting the property back usually means foreclosure. That takes time and money, and a buyer factors it in.
The good news is that this cuts both ways. A buyer who has paid for years has equity to protect. Those buyers rarely walk away.
The number that matters most in Indiana: the down payment
Pew found the median Indiana land contract had a down payment of just 4.8%, compared with 7.4% for regular mortgages. The median rate was 7%.
A small down payment means the buyer has little to lose. That's the biggest drag on Indiana land contract prices. Here's how equity changes things:
| Equity the payer has | How a buyer sees it |
|---|---|
| Less than 5% | Higher risk. Expect a bigger discount. |
| 10% to 20% | Solid. Most notes land here. |
| 20% or more, plus a year of on-time payments | Strong. Best prices. |
Equity grows two ways: payments that pay down the balance, and the home going up in value. A contract that started with little down can be much stronger five years later.
What a buyer will check
I look at three things on every deal: the payer, the property, and the paperwork.
- The payer. On-time history, how long they've paid, and whether they live in the home.
- The property. What it's worth today, its condition, and whether taxes are current and insurance is in place.
- The paperwork. Is the contract signed and recorded? Does it say who pays taxes and insurance? Does it say what happens if the buyer defaults? Is there a mortgage on the property in your name?
A contract written by an attorney or title company is worth more than a homemade one. It's clearer about what happens if something goes wrong.
How the sale works, step by step
- Get a quote. Send the balance, rate, payment, and payment history. Start here.
- Send copies of your papers. The signed contract, proof it was recorded, payment records, and your closing statement if you have one.
- Due diligence. The buyer orders a title search and a property value check, then calls your payer to confirm the balance. Plan on two to three weeks.
- Close. You sign an assignment of the contract and a deed passing your title, subject to the contract. The title company prepares them. You get paid.
- Your payer gets a letter. It tells them where to send payments. Their terms don't change.
Most sales close in about four to five weeks.
What your Indiana land contract is worth
Most notes sell for less than the balance, because the buyer pays you today for payments that come in over years. Typical notes sell for about 70% to 85% of the balance. Strong ones can bring 85% to 90%. Thin-equity contracts come in lower.
Try the note value calculator for a rough range. Or skip the guessing and get a real quote.
Ways to raise your price before you sell
- Record the contract if it isn't already.
- Keep a payment log with dates and amounts. Bank deposits are best.
- Confirm the taxes are paid and the home is insured.
- Wait for seasoning if the contract is brand new. Six to twelve months of on-time payments helps a lot.
- Consider a partial sale. You get cash now and keep the back end. See how a partial sale works.
Frequently asked questions
Can I sell an Indiana land contract that was never recorded?
Usually, yes. It will need to be recorded as part of the sale. Tell the buyer early so it's handled up front.
Is a contract for deed the same as a land contract in Indiana?
Yes. People use both names for the same thing. Some also call it an installment land contract.
My buyer is behind. Can I still sell?
Often, yes. The price will be lower and it will be based more on the property's value. Read can you sell a note if the payer is behind.
Do I need my buyer's permission to sell?
Usually not. Check your contract for a clause about assigning it. If there is one, show it to the note buyer.
How long does it take?
Most Indiana land contract sales close in about four to five weeks.
Will I owe taxes when I sell?
You might. Selling usually moves the rest of your deferred gain into this year. Read taxes when you sell an owner-financed note and talk with your CPA first.
Selling in Ohio instead? Read how to sell a land contract in Ohio.
Larry has invested in real estate since 2006 and has bought more than 300 mortgage notes. He runs LJH Investments, LLC, an Ohio company based in Madison, Indiana. More about Larry
This article is general information, not legal or tax advice. Laws change. Talk with your own attorney and tax adviser about your situation.