What is a "conditional sales contract"?

A "conditional sales contract" is accurately defined as a contract where the sale is contingent upon certain conditions being met. This type of agreement allows the buyer to take possession of the property while the seller retains legal ownership until the specified conditions are fulfilled, often involving the payment of the purchase price in installments.

The key aspect of this type of contract is the condition or conditions that must be satisfied for the legal title of the property to transfer from the seller to the buyer. For instance, it might involve the buyer needing to make a series of payments by a certain date, or it might involve the completion of repairs or other obligations. Once these conditions are met, the buyer gains full ownership.

Understanding the nature of conditional sales contracts is essential for real estate transactions because it governs the rights and responsibilities of both parties until the sales conditions are satisfactorily fulfilled. This differs fundamentally from agreements that require full payment upfront or lease options, which have their own specific legal implications.