A new kind of transaction has resurfaced in recent years. It goes by many names: rent-to-own, lease purchase, lease with option to purchase, lease with purchase option, lease with option, contract for deed, to name a few. Legally, they are called “installment sales agreements.” Whatever name is used, at their core, they all share the same idea – pay money now, get a deed later. These transactions are fraught with problems, either intentionally by scammers and “investors” willing to exploit vulnerable buyers, or unintentionally because unsophisticated parties encounter unanticipated problems. When a problem develops, the buyer loses. For this reason, we do not recommend rent to own transactions.
Get help here. Even if you don’t have any problem right now, many of these deal can go on for years or decades before the problem develops. But when a problem does arise, most of the harm falls on the buyer. Even if you have a written contract, the burden is on the buyer to take the seller to court to force compliance. That is expensive and can take years to resolve. At its worst, you may discover that your rights are not clearly protected in the agreement, and you could find yourself with no house and no deed. Don’t wait for the problem to blow up! Get advice from a lawyer now.
Video: The Dangers of Rent-to-Own Agreements
- Hear a great break down of rent to own with NPR’s Amy Scott, “One legacy of the housing crisis: risky rent-to-own deals”
- What to do a deeper dive? Check out these advanced materials.