Examining Predatory Contract for Deed Practices through Eviction Court Data

• In Event: Unstable Homeownership: Heirs' Property, Contracts for Deed, and Homeowner Assistance

Abstract

A Contract for Deed (CFD) is a rent-to-own agreement where the seller finances the purchase, allowing buyers to acquire a home through monthly payments over time. The deed is transferred only after the full purchase price is paid. CFDs are often seen as predatory because they impose homeownership responsibilities and rental disadvantages without corresponding benefits. During the contract period, tenant buyers must cover property taxes, insurance, and maintenance, while sellers aren't responsible for upkeep. If tenant buyers fall behind on payments, sellers can evict them and retain all paid money, including down payments and property improvements.

This study examines 16,982 residential leases supporting 22,200 St. Louis eviction proceedings (July 1, 2023 - December 31, 2024) to assess predatory CFD practices. Tesseract OCR and Python fuzzy searching were used to extract lease details. Preliminary findings include 132 CFD eviction filings, less than 1.0% of all eviction cases, concentrated in predominantly Black neighborhoods in North St. Louis City and County. The average sale price for CFD properties was $68,204, which is 27% higher than appraised values with an average down payment of $2,302 that would be forfeited if contract terms are violated. The average interest rate was 0.1325, with most loans having a 30-year term extending to 2054. Eviction filings occurred on average 261 days after agreement start, and nearly all CFDs included a clause requiring buyers to cover collection-related expenses if defaulting. These findings underline the predatory nature of CFDs and the need for policy and legal reforms to protect vulnerable low-income households.

Author

• Yi Wang, Washington University in St. Louis
  Presenting Author