Traditionally, in Pennsylvania, an agreement of sale between seller and buyer “seals the deal” for the purchase of real estate. However, a prospective seller may also choose to have the buyer take possession of the property and “pay as he goes,” i.e. enter into an installment purchase agreement for the real estate. The core of such an agreement is the seller’s retention of actual title to the property (subject to the buyer’s right to possess it if there is no default under the agreement), until the installment payments toward the purchase price are all paid by the buyer. Afterward, the seller conveys legal title to the property to the buyer.
Once fairly common in central PA, installment purchase agreements today can be found in all areas of the Commonwealth, including the Philadelphia area.
The problem comes when one of these agreements goes into default (usually for non-payment of installments). Because the seller remains in title, it’s not like he has a mortgage he can foreclose on and obtain the property at sheriff’s sale. The answer lies in the Pennsylvania Installment Land Contract Law (“PILCL”), 68 Pa. C.S. sec. 902 et seq.
Under the PILCL, different remedies are available to the seller seeking relief on a defaulted installment purchase agreement. In addition, the statutory scheme does not rule out other possible relief available under Pennsylvania law, such as filing a quiet title action. If you are a seller of real estate under an installment purchase agreement in default, contact Stark & Stark for expert enforcement of your rights.