Channel 2 Investigates

BUYERS BEWARE: Contracts to watch out for when buying a home

ATLANTA — Experts told Channel 2 Action News that a resurgent owner financing practice is offering families in low-income communities a chance at home ownership with a catch.

It is called a contract for deed. Families who cannot get a traditional mortgage sign on the dotted line and are told they're homeowners. But experts say they don't own a thing.

Charles Wright signed a contract for deed when he purchased his DeKalb County home. He leveled the backyard, repaired the roof and even replaced the flooring.

"I went into it as if this place were mine," Wright told Channel 2's Dave Huddleston.

"Because that's what you were led to believe?" Huddleston asked.

"Absolutely," Wright said.

After renting, even living in a hotel with his two young daughters, Wright previously thought his dream of homeownership was out of reach.

"He said, 'Congratulations on your first home, you are a new homeowner,'" Wright remembered. "I was just a happy dude. I'll never forget it."


Shortly signing for his home, Wright was hit by a car, and missed payments on his new house. A homeowner with a mortgage would have been protected, but Wright discovered he didn't own a thing.

"Then wham -- eviction notice on my door," Wright told Huddleston. "I've taken a few blows, but this one was the ultimate."

Big companies buy blighted homes in low-income neighborhoods in bulk. Companies say they offer a path to homeownership many thought impossible.

"These instruments are structured to set somebody up, help them fail and then go find the next person," said attorney Sarah Stein, of Atlanta Legal Aid.

Atlanta Legal Aid represents Wright. He is one of the first to fight a contract for deed in a Georgia court.

Stein said when someone signs a contract for deed, they are responsible for repairs, taxes, insurance and a high interest rate.

"There are companies that are doing this in many states in the nation. It seems to have become more popular more recently," Stein said.

The companies include Harbour Portfolio, a Texas-based firm run by Chad Vose. The company's contracts for deed practice in Georgia is completely legal.

Channel 2 dug through tax records, and found Harbor Portfolio owns more than 100 homes in metro Atlanta, including Wright's. According to court records, Harbour Portfolio bought the property from Fannie Mae for $11,000 and sold it to Wright for $37,000, at a 10 percent interest rate.

Because Georgia does not require contracts to be tracked, it's impossible to know how many companies use them, and how many home purchasers sign them.

"The seller of a contract for deed doesn't want it in the public record. They want to be able to treat it as a contract that can be terminated in 30 days and have no evidence in the record," said Frank Alexander, of Emory Law. "They are, in reality, however, one of the most dangerous documents anyone could ever sign."

Alexander is an expert on Georgia housing policy. He said other states, like Texas, have adopted new laws to regulate contracts for deed so there is more transparency for the home purchaser.

"The purchasers have no protections under Georgia law," Alexander said.

He said Georgians, like Wright, desperate to be homeowners may not be savvy enough to know what they are actually signing.

"If the person ever blinks the wrong way, misses a payment or fails to mow the grass or pay the taxes they're evicted and the seller keeps everything," Alexander said.

Wright wants to change that.

"All I know is it's not fair," Wright said. "I gave them my money and I put all my money into this house under the impression that it was mine and it's not mine."

Wright and Atlanta Legal Aid said they hope this lawsuit will create a precedent in Georgia that creates legal recourse to Georgians who have signed a contract for deed.

Harbour Portfolio denied any wrongdoing, but declined to comment to Channel 2, citing pending litigation with Wright.