New Consumer Protections for Contract-for-Deed Buyers

On August 13, the Consumer Financial Protection Bureau (CFPB) held a public hearing about Contract for Deed in St Paul. Contract for Deed sales have been on the rise in Minnesota, particularly amongst families who have a faith-based aversion to paying interest and amongst Latino community members, as testified by Homeownership Advisory Network advisor Roxanny Armendariz at the public hearing.

In 2024, the Minnesota State Legislature passed new legislation that aims to better protect homebuyers utilizing Contract for Deed. The law went into effect August 1. Here are the key takeaways:

• Home sellers are required to make certain written legal disclosures under Minnesota Statute sections 513.52- 513.60. If a Contract for Deed is used to sell the home, additional disclosures about the transaction are required, pursuant to Minnesota Statute section 559.202.
• If a contract payment is missed, the seller is required to provide a notice and 60 days for the buyer to catch up on payments. Importantly, if the contract is not cured during the 60-day cure period, the seller can cancel the contract and evict the buyer, with the buyer losing everything they have invested in the property.

For more information, see this publication from the Minnesota Attorney General’s Office on contracts for deed.

The Minnesota Homeownership Center has created resource guides for mortgage products that can serve as alternatives to Contract for Deed purchase. These include a Guide to Individual Taxpayer Identification Number (ITIN) Mortgages and a Guide to Non-Interest-Bearing Financing in Minnesota.

If you hear of homebuyers that are experiencing abuses in the home purchasing process, you can file a complaint with the Office of Minnesota Attorney General Keith Ellison online and additionally file with the CFPB. You also can contact the Minnesota Attorney General’s Office by calling (651) 296-3353 or (800) 657-3787.