There are great answers on the mechanics of the CD, but here are some cautions:
- If there is an underlying mortgage, there is likely a due on sale clause. That means once the CD is recorded, the mortgage company will have the right to foreclose immediately (No Mr. Nice Guy). I speak from experience.
- If you don't record the contract, it becomes difficult to enforce certain elements of it. This could mean loss of the downpayment, or other unpleasant issues.
- Good legal advise is more important for a CD than with a purchase or lease. Most purchase agreements use standard forms that have be reviewed & updated ad nauseum. Rental agreements are designed for flexibility. CD's are too often drafted by amateurs. You want this handled professionally for a well understood, well crafted agreement.
- Operate with a "worst case scenario" mentality. Understand your risk tolerance & get great 3rd party opinions. You can do really well, as long as you are making educated decisions.