Most Minnesotans have never heard of a contract for deed, and that's exactly what makes it dangerous. It looks like buying a house. It is legally almost the opposite.
In a contract for deed — sometimes called the "poor man's mortgage" — you make a down payment and monthly payments to a seller, but you don't get the title, and you build no real ownership, until you've paid the entire thing off, often after a balloon payment years down the road. Miss a payment along the way and the seller doesn't have to foreclose. Under Minnesota law, they serve a notice, wait out a short cure period, and then keep the house and every dollar you ever paid. No foreclosure sale. No six-month redemption period like a mortgage gets. No surplus returned to you. It just reverts, and your investment evaporates.
I've spent my career on the wrong end of transactions like that, so let me show you what it looks like when someone builds a business on it.
The slow flip
Between roughly 2017 and 2022, a Minnesota seller named Chadwick Banken sold about 160 homes on contracts for deed, marketing them specifically to Somali Muslim buyers as "sharia-compliant" — an alternative to interest-bearing mortgages that many observant Muslims won't take.
Here's how a 2022 ProPublica and Sahan Journal investigation documented it working: inflated prices well above what the homes were worth, large down payments, roughly six percent interest built in despite the "no-interest" religious framing, and a six-figure balloon payment due after a five-year term that most buyers could never actually meet. And when a buyer missed a payment, the seller ran the play the reporters named the "slow flip" — cancel the contract, keep the house and everything paid into it, and resell the same house to the next family. One buyer faced losing roughly $300,000 in payments.
That's not a housing product. It's a machine for extracting a down payment and a few years of rent out of one family after another using the same house.
On June 22–23, 2026, a Hennepin County jury found Banken liable under the Minnesota Human Rights Act — the Attorney General's case — for targeting a protected community. Restitution is pending. A jury looked at the "sharia-compliant" pitch and the slow flip and called it what it was: discrimination.
Why it hits the families it hits
This isn't random. Contracts for deed cluster exactly where mortgage lending has failed people. Nationally, the Pew Charitable Trusts estimates about 36 million Americans have used alternative home financing, with roughly 7 million using it currently — and the users skew disproportionately lower-income, Black, and Latino. In Minnesota, where Black homeownership is about 21 percent against 70 percent for white residents, and where the Somali community's homeownership rate sits around 10 percent, a product sold as the only path to a home finds a lot of families with no better option.
The federal Consumer Financial Protection Bureau, looking at this in 2024, found that contracts for deed fail far more often than mortgages and concluded they're "credit" that should carry lending protections. The product is designed so that the seller wins whether you succeed or fail — and fails you more often than a real mortgage would.
What Minnesota did in 2024 — and it's substantial
Here's the good news, because this series reports it when it's real. In 2024, Minnesota rewrote the law (2024 Minn. Laws ch. 123, art. 16), and it went at exactly the abuses above:
- It slowed the cancellation trap. Investor-sellers now have to give buyers a longer cure period, and they can no longer cancel the contract of a family member or cancel an unrecorded contract.
- It created a whole new chapter of disclosure rules (Minn. Stat. ch. 559A). An investor-seller now has to give the buyer real disclosures with a 10-day cooling-off period — including, remarkably, disclosing the price the seller themselves paid for the house, so a buyer can see the markup they're being charged. It requires disclosure of the balloon, the interest, and the amortization.
- It bans the churn. The "slow flip" — reselling the same house repeatedly after cancellation — is now specifically targeted.
- And it gives buyers a private right of action to rescind within two years. Unlike some laws in this series, this one lets the injured person actually go to court.
That's a serious reform, and it deserves credit. Minnesota watched an abuse get documented and responded with teeth.
What we can do
Enforce it, and publicize it. The new law is only as good as buyers knowing it exists — and the people most targeted are the least likely to have read a law-review summary of chapter 559A. The disclosures should reach buyers in the languages they actually speak, at the point of sale, and the Attorney General's win against Banken should be the loud example that tells every other operator the slow flip is over.
Close the recording gap for real. A contract for deed that never gets recorded is invisible — to the county, to future buyers, to anyone who might warn a family. Mandatory, prompt recording of every contract for deed is the cheapest transparency fix available, and it makes the churn far harder to hide.
Bring contracts for deed the rest of the way under mortgage-style protection. The CFPB is right that this is credit. A buyer who's paid for years into a home should not lose everything over one missed payment when a mortgage borrower in the same spot gets a foreclosure process and a redemption period. The gap between the two is the whole trap.
A family scraping together a down payment for their first home is doing the most American thing there is. The law shouldn't let someone turn that hope into a revolving door. Minnesota just took a big step to stop it — now let's make sure the families it was written for ever find out.
First the facts. Then the fix.
Sources
Minnesota contract-for-deed statutes verified against raw text at revisor.mn.gov: the out-of-court cancellation remedy and cure period (Minn. Stat. § 559.21), under which a seller who cancels keeps the property and prior payments with no foreclosure sale or redemption, contrasted with the mortgage redemption period (§ 580.23); the 2024 reforms enacted as 2024 Minn. Laws ch. 123, art. 16, which amended § 559.21 (longer cure period for investor sellers; bars on cancellation of family-member and unrecorded contracts) and created the new chapter 559A (buyer disclosures with a 10-day cooling-off period, disclosure of the seller's own acquisition price, balloon and interest and amortization disclosure, a churning prohibition, and a two-year private right of action to rescind). The documented abuse: ProPublica and Sahan Journal investigation (2022) of Chadwick Banken's approximately 160 contract-for-deed sales marketed as "sharia-compliant" to Somali Muslim buyers, with inflated prices, roughly six percent embedded interest, six-figure balloon payments, and the "slow flip" of cancel-and-resell; the Hennepin County jury verdict finding Banken liable under the Minnesota Human Rights Act (June 22–23, 2026), with restitution pending. Scale: Pew Charitable Trusts on alternative home financing (roughly 36 million Americans having used it, about 7 million currently), with racial and income disparities; Urban Institute on the Minnesota Black-white homeownership gap (about 21 percent versus 70 percent); Wilder Research on Somali-community homeownership (about 10 percent); Consumer Financial Protection Bureau (August 2024) finding that contracts for deed fail more often than mortgages and constitute credit under the Truth in Lending Act.
The 2024 law does not mandate an appraisal; it requires disclosure of the seller's acquisition price, and this article states it that way. The Banken restitution amount was pending as of publication and is not stated. Corrections: campaign@madgettformn.com.