Historical application of the Contract for Deed in Old City, Philadelphia, to create home ownership.
In 1990, a Philadelphia development group, Historic Landmarks for Living, who had successfully acquired 28 older historic commercial buildings, and then developed and repurposed them into luxury apartments, began the process of converting these apartment buildings into condominiums, for sale specifically to Owner Occupants, not investors.
The company eventually converted three buildings (The Wireworks (97 units), Bridgeview Place (160 units) and the Colonnade, (118 units) to condominium ownership. (The company then refinanced their remaining buildings, based on the higher demonstrated owner occupied condominium values, and they remain successful apartments).
Because of the lack of availability of traditional mortgages in the Savings and Loan crisis, the company used Contract for Deeds (known in Pennsylvania as Installment Sales Agreements), to allow buyers to purchase their units with $500 down payments, no closing costs, and monthly payments approximating rental levels. The buyers were then able to deduct the interest and property taxes on these contracts, with significant income tax savings.
The new owners eventually refinanced these contracts to the traditional deed title with mortgage form of legal ownership, and the buildings remain owner-occupied with the value appreciation of the condominiums over the years accruing to the new owners.
The social impact on the historical area, with an estimated 18% of the available apartment units in the neighborhood becoming owners instead of renters, was obvious and well documented, and heavily contributed to the increase in business and residential development from art galleries to restaurants and shops today.
Archived Articles from the Philadelphia Inquirer describe the process.
