Rent-to-Own Home Agreements Garner Attention

Alexandra Stevenson and Matthew Goldstein reported on the front page of yesterday’s New York Times that, “Alex Szkaradek is a landlord who seems to have the best of both worlds.

“Mr. Szkaradek, 36, collects rent, but he never has to pay for repairs on any of the more than 5,500 homes — many of them rundown — that his firm manages across the country.

“The firm, Vision Property Management, blurs the line between what it means to be a renter and a homeowner. These companies do not offer regular leases or mortgages — they offer ‘rent to own’ contracts on homes that require tenants to make all repairs, no matter how big or small.”

The Times article noted that, “But these rent-to-own agreements reside in a gray area of the law. An examination by The New York Times of contracts and court filings, as well as interviews with housing lawyers and more than a dozen of Vision’s customers across the country, found that these deals are risky, lack consumer protections and may not be enforceable in some states.”

Stevenson and Goldstein pointed out that, “Across the country, however, dozens of smaller firms offer to lease cheap homes with options to buy, such as Vision does. Entrepreneurs conduct how-to seminars at conferences for small landlords hoping to strike it rich. And housing lawyers in cities including Detroit, Philadelphia and Columbus, Ohio, say they are seeing an uptick in disputes involving rent-to-own transactions.”

Yesterday’s article noted that, “In most states, landlords are required to keep the homes and apartments that they rent in habitable condition. Some legal experts said contracts like the ones used by Vision could violate that requirement.

“Cincinnati, for example, has an ordinance that requires rent-to-own landlords to adhere to building, housing and safety codes, as well as to ‘make all repairs and do whatever is reasonably necessary to put and keep the premises in a fit and habitable condition.'”

The Times writers added that, “Judith Fox, a professor of law at the University of Notre Dame, said that in most states landlord obligations cannot be waived. ‘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 to federal truth in lending rules.’

“She added, ‘You can’t have it both ways.'”

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