Land contracts vary
widely from transaction to transaction.
In most cases, no grant deed is recorded. The buyer rarely obtains
a new mortgage loan at the time of purchase. Instead, the new owner
makes payments to an intermediary, who then makes payments on the
seller’s mortgage, which is still in place.
Keep in mind that such an agreement usually violates the lender's
guidelines. If the lender becomes aware of a transfer of title on the
property (which is why you usually don't record the grant deed), they
can exercise the "due on sale" clause of the note. This would require
you to refinance the loan or sell the property. Since many who buy on
land contracts have problems qualifying for a mortgage, you can see
how this can lead to problems.
At the same time, lenders generally only check for transfers of
title if the loan becomes delinquent.
Within a certain number of years, it is expected the buyer will be
able to qualify for a loan. At that time, they will obtain a new
mortgage and pay off whatever amount the land contract requires. Then
a grant deed is recorded and full ownership is conveyed.
