Colorado Law and Practice Course Practice Exam – Prep & Study Guide

In a land contract, the deed of the property is typically transferred to the buyer only after all payments have been made. This arrangement is a key feature of land contracts, which are also known as contracts for deed or purchase money mortgages.

Under this agreement, the buyer takes possession of the property and makes installment payments over a specified period, but legal title, represented by the deed, does not pass to the buyer until the full purchase price is paid. This protects the seller's interest by ensuring that they retain ownership of the property and have recourse in case the buyer defaults on the payments. The ultimate transfer of the deed occurs at the end of the payment term, solidifying the buyer's ownership once all obligations are fulfilled.

In contrast, the other options do not accurately represent how a land contract operates. For instance, transferring the deed immediately to the buyer would undermine the purpose of a land contract, which is designed to facilitate an installment payment process while providing some security to the seller until the total payment is completed.