Some rent-to-own agreements can be risky business

Rent-to-own agreements provide a simple way for an individual or family to rent a home and be assured they can own the property in the future.

It involves a lease with an option to buy at a specified time and date. In some cases, a portion of the monthly rent can be used for part of the down payment.

However, some of those agreements are written in a way that is questionable to attorneys. They can require the tenant to pay for all maintenance and repair costs. A recent investigation by The New York

Times calls into question some rent-to-own agreements, arguing that some of these deals are risky, lack consumer protections, and even may not be enforceable in some states, it was noted in a report by the National Association of Realtors.

“Smaller firms, in particular, are offering renters the opportunity to lease less expensive homes with an option to buy. But housing lawyers are reporting an increase in disputes involving rent-to-own transactions and are cautioning renters to read contracts carefully before they sign.

“Some renters later discovered building code violations and major problems with the homes they moved into. One renter told The New York Times he faced an $8,000 cost to install a new seweage system.

“The renter said (the landlord) helped him find a contractor to make the repairs but then rolled the cost into a new contract, which then valued the property at $60,000. That also increased his monthly costs by $65 to $470 a month.”

The report included quotes by tenants indicating confusion about the rent-to-own agreement:

“Some renters now say they were confused by the contracts’ terms and requirements when they signed them. They later find they are stuck with big, unexpected bills for repairs.”