When the concern does not own an unencumbered title, it is usual to make some definite arrangement under which the owner agrees to convey, or the mortgagee to release, such lots as are paid for in full by the customers of the concern. Otherwise, it might be necessary for a purchaser to await the completion of the concern's contract, or the payment in full of its mortgages, before he could receive an unencumbered title.
The terms under which such deeds to lots are issued vary greatly. Sometimes the deed is given only when the proportion of the purchase price applicable to that lot is paid to the owner in full, such amounts being, of course, credited to the concern and deducted from the total amount to be paid by it for the entire tract. Sometimes the owner or the mortgagee agrees to convey or release a part of the land proportionate to the payments made. In the case of selling contracts, the owner usually requires that he shall receive the full price for any specific lot he is required to deed during the active life of the contract. Whatever the terms and conditions may be, it is important that the accountant inform himself of them from the original agreement or from a complete copy thereof, in order to open appropriate accounts and make all proper entries.