A Contract for Deed, is also known as a Land Contract, Real Estate Contract and/or an Agreement for Deed.  What is it?  Good question.  A Contract for Deed allows a seller to sell a piece of real estate to a buyer but not transfer title until the buyer has fully paid for the property.  The seller usually receives payments from the buyer and upon full payment of the debt owed from the buyer, then transfers title over to the buyer.    Some transactions are handled this way because it enables the Seller, if the buyer defaults on the payments owed the seller,  to resell the property a lot faster than if the seller gave a deed and took back a mortgage or deed of trust from the buyer.   The reason for this, is the seller would have to file a foreclosure action if a Deed was given to the buyer.   Under a Contract for Deed, the seller, if there was a default in payments by the buyer, would only have to file a breach of contract action, which is a lot quicker and simpler.   For that reason, some sellers prefer to sell under a Contract for Deed scenario. 

Now that you understand a Contract for Deed and why some sellers prefer to sell in that manner, can a buyer who purchases under Contract for Deed sell the Contract for Deed and do an exchange for another existing piece of real estate?   The answer is yes they can, because every state in the union has determined that the purchase by Contract for Deed is in fact the purchase of the economic bundle of rights of ownership on that particular piece of real estate.  That means that a taxpayer who has purchased under a Contract for Deed, even though  they may still even owe money to their seller, can still sell their rights under that Contract for Deed and do an exchange for another piece of real estate.   FYI---there are only a few states that still allow Contracts for Deeds, so you will be hearing less and less about it in the future years.