Land contracts: Making deals happen when capital is tight

The growing appeal of land contracts in the Upper Midwest

Business owners, developers, brokers, and landowners across Wisconsin and Minnesota face a familiar question: How do we keep projects moving forward in today’s market?

One answer gaining renewed attention is the land contract — also known as a contract for deed or seller financing. Though often viewed as a last resort, a well-drafted land contract can be a powerful tool to keep commercial and development deals moving when encountering challenges with traditional financing.

How land contracts bridge the gap

In our region, land contracts are increasingly common for infill sites, redevelopment projects, and early-stage developments. They offer flexibility that helps move projects forward when capital is a challenge. Here’s how.

• Bridge financing gaps. When banks hesitate to finance speculative or pre-entitlement parcels, a seller-financed land contract fills the void.
• Align incentives. Ownership can transfer gradually as milestones, like entitlements or infrastructure, are achieved.
• Speed and control. Land contracts close faster and avoid restrictive lender covenants.
• Income and upside for sellers. Landowners earn interest and staged payments while maintaining title until the project proves itself.
• Custom payment schedules. Terms can follow the project’s real cash-flow curve instead of more rigid bank amortization.

In Wisconsin, land contracts have long been used for alternative financing and tax planning. In Minnesota, 2024 legislative reforms improved buyer protections for residential investor-seller deals by extending cure periods and requiring more disclosure. Commercial and development contracts remain outside this new law but benefit from the same transparency principles.

Managing risk while protecting the deal

Land contracts carry risks, but those risks are manageable. The key is professional drafting, clear milestones, and adherence to state law.

Smart structuring choices include:

• Tie title transfer to permits, infrastructure completion, or lease-up.
• Include cure periods and avoid automatic forfeiture clauses.
• Allow early payoff or refinancing when market conditions improve.
• Permit assignment under defined conditions.
• Escrow for taxes, insurance, and maintenance.
• Require lien waivers and progress reviews.

And add legal guardrails: 

• Record the contract or memorandum to protect priority.
• Define default terms clearly and specify who pays enforcement costs.
• Perform full title review and disclose encumbrances and environmental issues.
• Understand each state’s forfeiture vs. foreclosure remedies.

In Minnesota, the buyer (vendee) must record a land contract within four months of signing, or risk losing priority. The new 2024 investor-seller residential law now also requires sellers to give 30 days’ notice before a 90-day cancellation period, giving buyers more time to fix defaults.

In Wisconsin, buyers hold equitable title while sellers keep legal title until paid in full. By default, the seller can seek strict foreclosure through the courts after a redemption period. These contracts act as both financing and conveyance tools, so precision matters.

Why developers, investors, and brokers should care now

With lingering higher interest rates and tighter credit, flexible deal structures are more important than ever. Land contracts can help you:

• Gain early site control without full financing.
• Advance projects through entitlement and design phases.
• Offer sellers gradual payout with continued upside.
• Reduce reliance on bridge or mezzanine loans.
• Preserve optionality and manage downside risk.

In the Upper Midwest, this approach turns stalled land into working capital — keeping projects alive when traditional funding falls short.

Are you looking for new ways to move your project forward? We can help you evaluate creative structures, such as land contracts and design-build strategies, that make development feasible when capital is tight. Contact us to explore your options.