Reading in the New York Times yesterday about exploitative contracts for deeds to dilapidated houses in places like Akron, Ohio, we were reminded of a similar practice once prevalent in Albany. As in Akron, the seller was a corporation with considerable legal expertise—the firm of Sidney Albert & Irving Kirsch, now Tri-City Rentals. The buyers were aspiring homeowners, ineligible for bank loans. A major difference was Albany’s lack of housing code enforcement.
Researching Albany’s lost 98 acres, we’ve discovered several examples of this practice, including a contract (“option agreement”) signed by John and Vivian Robinson on September 20, 1955. This contract gave the Robinsons the option to purchase 45 Jefferson on October 1, 1968. In the intervening years, they were required to pay $23.85 monthly to Albert & Kirsch and were responsible for the cost of all repairs, insurance, taxes, assessments, and water rents.
Failure to make the monthly option payments would mean cancellation of the contract. Because they built up no equity in the property, the Robinsons would lose any investment in improvements or repairs.
At the end of thirteen years, the Robinsons could acquire the deed to 45 Jefferson for $8,200 at 6% interest, minus the total of their monthly option payments. Of course, this was all moot after March 27, 1962. When the State of New York seized 45 Jefferson, along with 1,150 other properties, Albert & Kirsch still held the deed.
We know that 45 Jefferson was appraised by the State at $5,500 and that Albert & Kirsch agreed to a $6,000 reimbursement. However, we don’t know whether the Robinsons received any of this.
William Kennedy effectively ended lease-and-option sales by Albert & Kirsch, when—much to the embarrassment of the Albert and Kirsch families—he exposed this practice in a high-profile series on the deplorable state of low-income housing in Albany. (We hope Matthew Goldstein and Alexandra Stevenson’s article in the New York Times will have the same effect.)
Kennedy explained that the agreements provided some benefit to buyers, who lacked the money for a down payment or the credit for a bank loan. And assuming repairs weren’t too onerous, it allowed prospective homeowners to amass savings by renting out portions of the property. However, he concluded, “[A]ny negative aspects accrue only to the buyer. The landlord can’t lose.”