Can the seller also claim a homestead exemption on the same house?

No. Only the party physically occupying the home as their primary legal residence can claim the exemption. Because the seller has surrendered possession to the buyer, the seller cannot claim a homestead tax break on that property.

What if my land contract is not recorded with the county?

In some states, unrecorded contracts are rejected outright by assessors. Other states allow buyers to present an unrecorded contract alongside a notarized affidavit of ownership, but recording is always the safest approach.

Does the buyer receive senior or disabled tax freezes under a contract for deed?

Yes. If a buyer holding equitable title meets age, disability, and income eligibility standards, they can claim senior property tax freezes and disability reductions in jurisdictions that offer them.

What happens to the homestead exemption if the buyer defaults?

If the buyer defaults and the contract is canceled through legal forfeiture or foreclosure, the buyer loses equitable title. If the seller reclaims possession, the seller must re-apply under their own eligibility status.

Land Contracts and Contracts for Deed: Can the Buyer Claim a Homestead Exemption?

By Sharon Ben-Moshe · October 2026

Homestead Exemptions

Homestead property tax exemption protection illustration

A land contract, also known as a contract for deed, bond for title, or agreement for deed, is a seller-financing arrangement where the buyer makes regular monthly purchase payments directly to the seller. While the seller retains bare legal title until the purchase price is paid in full, the buyer takes immediate physical possession of the property.

Many buyers assume they cannot claim a homestead property tax exemption because their name does not yet appear on a recorded warranty deed. However, real property jurisprudence establishes that a land contract buyer possesses equitable title, which allows them to qualify for primary residence property tax relief in most states.

The doctrine of equitable title in property taxation

Under common law and state tax statutes, property ownership splits into legal title and equitable title. Legal title remains with the seller as security for payment, while equitable title belongs to the buyer who holds possession, bears the risk of loss, and pays ongoing property taxes and insurance.

State property tax codes, such as those in Ohio, Michigan, Minnesota, and Indiana, explicitly grant homestead exemptions to holders of equitable title. If a buyer lives in the home as their primary domicile and is contractually responsible for real estate taxes, assessors recognize their exemption eligibility.

County recording requirements and documentation

To claim an exemption under a contract for deed, county assessors require verified written proof. An unrecorded, informal contract hand-written between family members is rarely accepted during assessor reviews.

Recorded memorandum of land contract: Many counties require the buyer or seller to record the land contract or an official memorandum of land contract with the county register of deeds. Recording puts the public and the tax assessor on notice that equitable ownership has transferred.
Tax payment obligation clause: The written contract must clearly state that the buyer is obligated to pay real estate taxes, special assessments, and property insurance.
Proof of primary residency: The buyer must supply residential evidence, including a state-issued driver license displaying the property address, voter registration, and utility accounts matching the contract terms.

State rules: Michigan, Ohio, and Texas

Assessment districts apply statutory rules to prevent dual-exemption abuses between sellers and buyers.

Michigan Principal Residence Exemption (PRE): Michigan Compiled Laws § 211.7cc allows land contract vendees to claim the 18-mill school tax exemption. The buyer must file Form 2368 and record the land contract with the county register.
Ohio Owner-Occupancy Tax Reduction: Ohio Revised Code § 323.151 provides that land contract purchasers qualify for the 2.5% owner-occupied tax rollback, provided the land contract is officially recorded with the county recorder.
Texas Tax Code § 11.13: Texas recognizes purchasers under recorded contracts for deed as qualifying homeowners. If the contract is not recorded, Texas permits an exemption only if the buyer files an affidavit of ownership alongside the purchase contract.

Risks of contract forfeiture and back-taxes

Buyers under a contract for deed must remain vigilant regarding property tax administration. In many seller-financed arrangements, buyers send tax installments to the seller, expecting the seller to pay the county treasurer.

If an unscrupulous seller pockets the funds without paying the county, tax liens can attach to the property. Reviewing county tax rolls directly online confirms that payments are applied and that your homestead exemption status is correctly registered.

Buyers entering into land contracts should always record the agreement or a memorandum of contract with the county register of deeds. Taking this step validates equitable title, secures your homestead exemption, and lowers your monthly housing costs.

Frequently asked questions

Can the seller also claim a homestead exemption on the same house?: No. Only the party physically occupying the home as their primary legal residence can claim the exemption. Because the seller has surrendered possession to the buyer, the seller cannot claim a homestead tax break on that property.
What if my land contract is not recorded with the county?: In some states, unrecorded contracts are rejected outright by assessors. Other states allow buyers to present an unrecorded contract alongside a notarized affidavit of ownership, but recording is always the safest approach.
Does the buyer receive senior or disabled tax freezes under a contract for deed?: Yes. If a buyer holding equitable title meets age, disability, and income eligibility standards, they can claim senior property tax freezes and disability reductions in jurisdictions that offer them.
What happens to the homestead exemption if the buyer defaults?: If the buyer defaults and the contract is canceled through legal forfeiture or foreclosure, the buyer loses equitable title. If the seller reclaims possession, the seller must re-apply under their own eligibility status.