you may have used a conditional contract of sale without ever knowing the term. a conditional contract of sale can work out well for both parties. an installment contract to buy real estate or equipment, for example, won’t give you the title if you don’t make the payments. a conditional purchase agreement is one where the buyer has the right of use without full ownership, according to the legal information institute. if you buy equipment on an installment plan, for example, it’s yours only if you meet the condition of making all the payments. a conditional contract of sale is also useful if all the ducks aren’t lined up yet. suppose you’re buying a building for your new factory, and you and the seller both want to close, but there are issues. a conditional purchase agreement commits you both to the deal, so neither party has to worry about someone making a better offer. this can include finding financing, the building passing inspection or any other important conditions. fail to meet the conditions, and the deal falls through.

a conditional sales agreement is a financing arrangement where a buyer takes possession of an asset, but its title and right of repossession remain with the seller until the purchase price is paid in full. also known as a conditional sales contract, the seller allows the purchaser to take delivery of the items outlined in the contract and pay for them later. rightful ownership of the property belongs to the seller until the full price is paid by the buyer. a buyer and seller come together and begin the contract with a verbal agreement. acquiring property through a conditional sales agreement may allow a business to deduct the interest expense on its tax return. a conditional sales agreement may not require a down payment and may also have a flexible repayment schedule.