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-toown 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-toown 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 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.
“If it’s a lease and they are claiming that none of the landlord-tenant obligations apply, then I would argue they have to adhere
A recent investigation by The New York
Times calls into question some rent-toown agreements, arguing that some of these deals are risky ...
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 to federal truth in lending rules,” said Judith Fox, a professor of law at the University of Notre Dame. “You can’t have it both ways.”
In today’s market, about 12 percent more homes are listed as “fixer-uppers” than were referred to as such five years ago. The number of similar listings has been rising steadily since 2011.
Rising home prices and tough buyer competition may be giving sellers more flexibility to list their home for sale “as-is” without needing to fix it up first. There are even more among highpriced homes in hot markets, according to a new Zillow analysis.
The report identified the number of fixer-upper homes listed for sale beginning in 2011 and ending in 2015, and compared them to overall for-sale inventory trends.
To identify fixer-uppers, Zillow mined historical listing descriptions for phrases such as “fixer-upper,” “TLC” and “needs work,” it was reported by the National Association of Realtors.
“Nationally, expensive fixer-uppers, or those priced within the top third of their markets, saw the biggest surge in inventory over the last five years, rising nearly 35 percent. Conversely, affordably priced fixer-uppers, or those valued within the bottom tier, increased less than 3 percent.”
Video walk-throughs, which are short videos of homes listed for sale, have been a popular means of marketing homes via the internet.
Now, with the increas- ing demand for rental properties, this concept has been replicated for homes available for rent. One firm recently announced implementation of this system.
Zillow introduces video walk-throughs on rental listings, providing renters with an immersive way to envision themselves in a home.
“Video walk-throughs are short videos that will give renters more information about a home’s key features and special attributes,” according to a news release. “Video walk-throughs are designed to fit into the browsing behavior of renters.”
The report pointed out the advantages of establishing a firm time limit for each video.
“With a time limit of two minutes and no sound, video walkthroughs give renters a new way to explore the real estate market and narrow down the homes they want to tour. The format is the same for every listing, giving renters a consistent viewing experience, allowing them to more easily compare homes.
“Video walk-throughs have been tremendously popular on for-sale listings. Bringing them to rentals is a natural extension,” said Jeremy Wacksman, Zillow chief marketing officer. “Renters (get) a quick glimpse into home features that are hard to capture in photos, like how a home is laid out or how much natural light there is in the kitchen.”