A Contract for Deed enables a buyer to pay the purchase price in installments, with the balance being due on maturity, at which time the seller must turn over legal title to the property. The buyer is given possession of the property and equitable title. The seller holds legal title until payments are completed.
To quote The Language of Real Estate, "The contract for deed is used quite extensively in many areas, where it may be called a land contract, agreement of sale, installment contract, articles of agreement, conditional sales contract, bond for deed or real estate contract. In a dynamic and rapidly appreciating real estate market, the contract for deed enable buyers to purchase property on reasonable financial terms and thereby benefit from the appreciation of the property values. Many buyers then sell the property at a profit before their final payment becomes due. In a tight money market where it is difficult ot qualify prospective buyers for conventional financing, the contract for deed is frequently the best method to sell or purchase a property. Especially benefited by the contract for deed are young couples, who would have difficulty qualifying for a bank loan at the time of entering into the contract for deed, but whose incomes will increase before maturity of the agreement, enabling them to refinance and pay off the contract for deed.
A Lease to Purchase to basically a Lease Option to purchase. Lessor/optionor must be careful to structure the transaction so that the IRS does not characterize the deal as a sale, rather than a lease.
The two basically accomplish the same thing - purchase of the property - but with each, there are some important items that must be addressed in the contract or lease agreement. You would be wise to consult with an attorney, particularly if the transaction is a more complicated one.