A House You Can Buy, But Never Own
ATLANTA—It was not until a few years after he moved in that Zachary Anderson realized that he was not, in fact, the owner of the house he thought he’d purchased. Anderson had already spent tens of thousands of dollars repairing a hole in the roof, replacing a cracked sidewalk, and fixing the ceilings of the small two-bedroom home where he lives in southwest Atlanta. He was trying to get a reduction in his property taxes when his brother, who was helping him with his taxes, looked up the property in public records and found that the owner of the home was actually listed as Harbour Portfolio VII LP.
“It’s like a trick,” Anderson, a 57-year-old, told me, sitting in front of a wood-burning fireplace he’d installed in the living room of the house to lower his heating bills. “They get free work out of a lot of people.” Anderson had entered into a contract for deed, a type of transaction that was rampant in the 1950s and 1960s before African Americans had access to avenues of conventional lending. In a contract for deed, the buyer purchases an agreement for the deed rather than buying the deed itself. The tenant has to fulfill the conditions of the agreement in order to get the deed, conditions that usually include making a series of timely payments over decades, paying for home repairs and general maintenance of the home, and paying taxes and insurance on the property. If he misses one payment, thus violating the agreement, he can be evicted, losing all the equity he put into the home.
Though half a century ago, contract-for-deed arrangements were often made between an individual real-estate speculator and a tenant, today they are more commonly made between a tenant and a big private investment company, like Harbour Portfolio Advisors, which is based in Texas and has entered into thousands of contract-for-deed arrangements across the country.
My colleague Ta-Nehisi Coates detailed contract-for-deed arrangements—also called rent-to-own deals—in his 2014 cover story “,” which looked at the prevalence of such arrangements in 1950s Chicago. What is surprisinga book on the history of predatory lending in Chicago, about contract-for-deed arrangements. “The housing is in way worse shape, the markups are grotesque, and these people have been through multiple forms of credit exploitation, which is partially why they’re in this market.”
