There are protections in place for the seller that provide that the buyer can be kicked out for non-performance if a payment is 45 days late. No foreclosure process. Also, the down payment would be forfeit in most situations.
The buyer and seller can agree to restrictions on what can be done with a property during the Bond for Deed period. For example, a seller may wish to have in the contract that no improvements or construction are to be done, or the buyer is not allowed to lease the property, and further incumber it with a tenant's rights. These, as all terms in the contract, are negotiable, and should be set forth by an attorney who is aware of the intention of the parties in the particular situation. In some cases, a buyer and seller will agree to allow certain improvements, and the purpose for the Bond for Deed is to get an otherwise non-conforming property in a state where it can, then, be financed. Bond for Deed is a very useful tool for both buyers who are not yet qualified under underwriting standards, but expect to be in the near future, and for properties that, for whatever reason, would not qualify in their current state for financing.
Always seek the counsel and guidance of a real estate attorney before entering any real property contract, is my advice -
In Louisiana, as in some other states, A bond for Deed is much riskier than a traditional mortgage
A traditional mortgage, there is a lengthy foreclosure process.
Bond for Deed, mis a payment, 45 day later, State Law allows the Sheriff to remove your possessions!
Owner financing - You as the buyer will actually own the home and have title to it at closing. You can do anything you like to the home, rent out, resell it as you like because you are the OWNER by then. The seller of the home becomes a lien holder (like the bank), and you will pay payments just like you pay mortgage, at an agreed term, rate, etc. Some owner financing could be very similar to mortgages: ex. 30 years, fix rate.
Bond for deed - You as the buyer will rent the home for a period of time usually 1 to 2 years, and then refinance with a mortgage to cash the seller out. This is good when you can not get mortgage now but think you can improve credit and meet the lender's guidelines later on. However, you don't have the title to the home yet, so you can not resell, and most likely can not rent out, or do renovations to it as if you have already own it. Your payments could be higher than market rent and most likely high enough to cover the seller's current mortgage, insurance, tax, HOA, etc. Besure to check if the seller has adjustable rates or is not currently in default with mortgage, and pay your payments through escrow companies to make sure the money is properly distributed to all accounts.
I Sell Houses - Owner Financing Available for ALL Credit Types
(1) you pay a down payment,usually 10% but negotiable
(2) You agree to lease the house for a specified period of time--usually no longer than 2 years. you pay a rental that must be above market rate.
(3) The down payment and extra funds are placed into an escrow account
(4) At the specified time,you take your accumulated down payment and go to a mortgage lender to get financing
(5) you purchase the house just as you would in a standard purchase
(6) The owner holds the mortgage and the deed until you actually close
(7) if you do not go through with the transaction,you forfeit your escrow funds and can be asked to leave the house
(8) you are responsible for taxes,insurance & maintenance
(9) if you miss even 1 payment( you can be declared in default and formally evicted. The grace period is usually only 3 days before eviction proceedings can be started.