Get a Free Quote Now

The Predatory Land Contract Problem in Ohio

Ohio has been at the center of the predatory land contract problem in the United States, and anyone holding or buying an Ohio land contract today needs to understand how the state got here.

After the 2008 financial crisis, traditional mortgage lending tightened across the country. In Ohio's Rust Belt cities -- Cleveland, Cincinnati, Dayton, Akron -- entire neighborhoods were left with abandoned and foreclosed homes that banks refused to finance. Land contracts filled the void, offering a path to homeownership for buyers who could not qualify for a conventional loan. That much was understandable. But large investment companies saw something else: an opportunity to exploit the land contract structure at industrial scale.

Harbour Portfolio Advisors, a Dallas-based firm, purchased over 6,700 distressed properties from Fannie Mae's bulk sale program at an average price of roughly $8,000 per home. They resold these properties to low-income buyers via land contracts at four to five times the purchase price, charging interest rates around 10%. The homes were in rough shape -- properties that needed major structural work, new roofs, plumbing, and electrical. Homes that no bank would touch.

The scheme worked like this: the buyer moved in and started pouring their own money into repairs. They replaced the furnace, fixed the roof, rebuilt rooms. But because the seller retains legal title in a land contract, the buyer had no ownership protection. Miss a couple of payments and the company would initiate forfeiture, evict the buyer, keep every dollar paid, and put the property back on the market for the next buyer. The cycle repeated over and over on the same house.

Cincinnati Takes Legal Action

In April 2017, the City of Cincinnati sued Harbour Portfolio Advisors, alleging predatory behavior and housing code violations across dozens of properties. The city argued that Harbour was selling uninhabitable homes to vulnerable buyers through land contracts, collecting payments while the properties deteriorated, and then cycling through new buyers when the previous ones defaulted. Cincinnati's lawsuit was one of the first municipal actions against this practice in the country.

The broader investigation came after The New York Times published its 2016 investigative series "Market for Fixer-Uppers Traps Low-Income Buyers" by Matthew Goldstein and Alexandra Stevenson, which documented how companies like Harbour were systematically targeting low-income, predominantly nonwhite communities. The reporting found that 93% of Harbour's properties were in census blocks that were at least 60% nonwhite. The Consumer Financial Protection Bureau (CFPB) subsequently sued Harbour Portfolio.

Ohio's Legal Framework: ORC 5313

Ohio was not entirely without protections. Under Ohio Revised Code Section 5313, once a land contract buyer has been paying for five years or has paid 20% of the purchase price, the seller must use the foreclosure process to terminate the contract -- forfeiture is no longer an option. Below those thresholds, the seller can pursue forfeiture with proper notice.

The problem was that many of the predatory contracts were structured to trigger forfeiture before buyers reached those protections. Payments were set at levels that kept buyers below the 20% threshold, and contracts were written to maximize the seller's ability to terminate early.

Ohio legislators attempted to address the gaps. HB 368 was introduced in the 2017-2018 session, and HB 103 was introduced in 2019, both aimed at strengthening consumer protections for land contract buyers. Neither bill became law. Ohio remains a state where land contract regulation exists but contains significant gaps that the predatory model was designed to exploit.

The National Response and What Changed

The Times reporting and the CFPB investigation triggered a wave of state-level reform. Texas regulated land contracts so heavily they became impractical. Oklahoma declared all contracts for deed to be mortgages. Illinois passed the Installment Sales Contract Act in 2018. Minnesota enacted major reform in 2024 prohibiting the forfeiture-and-resale cycle.

At the federal level, the CFPB issued a formal advisory opinion in August 2024 confirming that the Truth in Lending Act and Regulation Z apply to land contract transactions, subjecting sellers to ability-to-repay requirements and mandatory disclosures.

What This Means for Ohio Land Contract Holders

The regulatory environment around land contracts has shifted permanently since the mid-2010s. If you hold a land contract on Ohio property, you are holding an instrument with more legal complexity than it carried a decade ago. The ORC 5313 thresholds, the national trend toward treating land contracts like mortgages, and the possibility of future Ohio legislation all add compliance risk for sellers.

This is one of the reasons many Ohio land contract holders choose to sell their contracts for a lump sum rather than continue managing them. At Amerinote Xchange, we understand Ohio's land contract laws and the current regulatory climate. We factor all of it into our pricing, and we handle the legal complexity on our end.