SitemapWhile land contracts can be an alternative route to homeownership for people without access to traditional mortgages, the terms often lead to more community destabilization in areas already weakened by the foreclosure crisis, according to researchers, attorneys, fair housing activists and other officials.
Trumbull County had the most land contracts recorded with county recorders’ offices across the state between January 2008 and January 2018, according to a report composed by Victoria Jackson with Ohio Policy Matters. She said many land contracts are never recorded despite a state law requiring them to be.
If the terms are appropriate, the contracts can be helpful to people seeking to buy a home who do not have the credit history required for traditional bank loans, or those seeking homes in areas banks deem too risky to lend in. The contracts also can be helpful to homeowners trying to sell a home in a market flooded with undervalued houses, said Matt Martin, executive director of Trumbull Neighborhood Partnership, which runs the Trumbull County Land Bank.
But when large investment groups, or even local real estate investors and landlords, get their hands on a large amount of properties in places like Warren and Youngstown, land contracts and lease-to-own contracts are often riddled with clauses that offer the illusion of homeownership without the benefits and protections but rife with obligation, said Rachel Nader, managing attorney of Community Legal Aid.
“In the Mahoning Valley area, people in the city of Youngstown and the city of Warren have long been preyed upon by entities that promise the dream of home ownership because of our vulnerable populations. We see it in the most devastated neighborhoods,” Nader said.
The seller can force the buyer out of the home through a forfeiture, holding onto all money and value put into the home. The protections afforded to someone being put through a foreclosure are not available to those in land contracts until they have been in the contract for five years, or have paid 20 percent of the price, according to the report. To read the full story from the Tribune Chronicle, click here.