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 in prior years, 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 successfully refinanced their remaining buildings, based on the higher demonstrated owner occupied condominium values, and they remain successful apartments to the present time).
Because of the lack of availability of traditional mortgages due to the 1986 through 1995 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 successful to this day, with the value appreciation of the condominiums over the years accruing to the new owners.
The social impact on the area, with an estimated 18% of the available apartment units in the neighborhood becoming owner occupants instead of renters, was obvious and well documented, and heavily contributed to the increase in business ranging from art galleries to restaurants and shops today.
Archived Articles from the Philadelphia Inquirer describe the process.
