In addition to the problems described above, there are no two identical contracts and, according to Cheryl Peterson of Twin Cities Habitat for Humanity, the terms of the agreement are often unclear. The contract for the deed is usually a one- to five-page document that includes the amount of the purchase, the interest rate, the monthly payment and some word discussions in relation to the cancellation. Documents often do not contain any standard provisions for the start of the cancellation process. This lack of clarity in the contracts for the deed creates difficulties for financial advisors who advise buyers who have expired. Peterson says, “You can`t say, “If you`ve seen ten contracts for the deed, you`ve seen them all.” That doesn`t make you an expert, because the next 10 will all be different. Historically, contractual agreements were popular in Chicago in the mid-20th century, and buyers, often black families, who were avoided by state-insured mortgages, “did not accumulate equity and faced a long and precarious path to property.” . While a deed contract can sometimes benefit a buyer who has no other means of getting to his home, it is a high-risk option, subject to abuse and predatory practices. There is also a lack of many consumer protection rights and rights that, under government and federal laws, are available to homebuyers who have traditional mortgages. If the buyer is unable to pay or is in default under other contractual conditions, the seller can terminate the contract, distribute the buyer and quickly recover the property without forced liquidation or legal recourse. A contract has several advantages, including: in a deed contract, the purchase of real estate is financed by the seller and not by a third-party lender such as a commercial bank or credit union. The agreement can benefit buyers and sellers by increasing credit to home buyers who would otherwise not be eligible for a loan.
Public and non-profit housing organizations have used the contract as an instrument to help low- and middle-income households acquire real estate. As with a standard mortgage, a contract usually has an agreed price and payment plan for the facts.