National curriculum lesson 77 · Financing

Owner Financing and Installment Land Contracts

Owner financing means the seller extends credit for some or all of the purchase price. Common forms include a purchase-money note secured by the property, an installment land contract in which legal title is retained until stated conditions are met, and a wraparound arrangement that includes an existing debt. These structures do not avoid disclosure, fair-lending, due-on-sale, recording, or licensing rules.

Facts checked against the current PSI Candidate Information Bulletin and GREC sources. Last reviewed August 2, 2026. Editorial standards.

What is the exam-ready answer?

Official syllabus mapping for Owner Financing and Installment Land Contracts
Roadmap lesson	77 of 500
Official syllabus topic	Owner Financing and Installment Land Contracts
Official PSI area	Financing
Published area weight	10% of the 100-question national portion
Exam portion	National salesperson portion
Source edition	PSI Georgia Candidate Information Bulletin dated July 1, 2026
Last verified	August 2, 2026

The Rule

PSI publishes the weight for the complete content area, not a fixed question count for this lesson. Learn the rule well enough to apply it when PSI changes names, numbers, or parties in a new scenario.

Complete lesson

Read each concept as part of one decision system. The exam often gives one accurate statement and three statements that belong to a nearby concept.

Purchase-money financing

The buyer gives the seller a note for part of the price, commonly secured by the purchased real estate. The contract must state principal, interest, payments, maturity, security, and default rights.

Installment land contract

The buyer usually receives possession and equitable rights while paying installments, but the seller retains legal title until the contract requirements are satisfied. Default remedies are governed by the agreement and law.

Wraparound financing

A new obligation wraps around an existing loan. The original loan remains, and a due-on-sale clause or payment failure can create serious risk.

Risk controls

Parties should address lien priority, taxes, insurance, title evidence, servicing, balloon payments, default, recording, and federal or state lending requirements.

Decision rule

Identify who is the creditor, who holds title, which liens remain, and who is personally liable on each debt.

Georgia-specific distinction

Georgia owner-financed transactions require careful drafting and closing review, commonly involving an attorney. A Georgia licensee should not draft financing instruments or promise that a structure avoids federal lending rules or an existing lender's due-on-sale rights.

Worked example

Scenario. A seller receives monthly payments for five years and agrees to deliver the deed only after the final payment.

Reason it through. The buyer is paying over time while the seller retains legal title under the stated arrangement.

Answer. This describes an installment land contract rather than an immediate deed plus seller-held security deed.

Common exam traps

Assuming owner financing is unregulated
Confusing a land contract with an ordinary lease
Ignoring an existing due-on-sale clause
Assuming possession equals legal title

Original practice questions with detailed explanations

These questions were written for instruction and mapped to the current outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.

Question 1

Who commonly retains legal title during an installment land contract?

A. Buyer
B. Seller
C. Appraiser
D. Broker

Show answer and explanation →

Answer: B. Seller

The seller commonly retains legal title while the buyer pays and holds contractual or equitable rights.

Question 2

What is a major wraparound-loan risk?

A. No debt exists
B. An underlying loan and due-on-sale clause remain relevant
C. Title cannot transfer
D. Interest is prohibited

Show answer and explanation →

Answer: B. An underlying loan and due-on-sale clause remain relevant

The existing obligation remains and can be accelerated or defaulted even though the buyer pays the seller.

Question 3

Does seller financing eliminate fair-lending and disclosure law?

A. Yes
B. No
C. Only for land
D. Only when no broker participates

Show answer and explanation →

Answer: B. No

Applicable consumer-credit, disclosure, fair-lending, and state rules can still govern.

Mastery tracking

Mark this lesson mastered only when every statement is true.

State the direct answer and decision rule without notes.
Explain every core concept in plain English.
Solve the worked example after changing one important fact.
Identify the Georgia distinction before reading answer choices.
Answer all three questions correctly and reject every distractor.
Repeat the topic in mixed practice on a later day.

Recommended next lesson

Continue with Specialty loan products. Lesson 78 covers bridge, construction, reverse, home-equity, and other purpose-specific loans.

Return to the Financing hub to see every official branch and the complete lesson sequence for this content area.

Owner Financing and Installment Land Contracts questions

Facts checked against the current PSI Candidate Information Bulletin and GREC sources. Last reviewed August 2, 2026. Editorial standards.

Is Owner Financing and Installment Land Contracts on the Georgia real estate exam?

Yes. It belongs to PSI's Financing content area, which is 10% of the 100-question national portion. PSI publishes content-area weights, not a guaranteed question count for this individual lesson.

What is the main rule for Owner Financing and Installment Land Contracts?

Identify who is the creditor, who holds title, which liens remain, and who is personally liable on each debt.

What Georgia-specific distinction should I remember?

How do I know I have mastered this lesson?

Explain the rule without notes, solve the worked example again with changed facts, answer all original questions correctly, explain every distractor, and repeat mixed practice on a later day.