“ … these rent-to-own agreements reside in a gray area of the law,” the New York Times wrote in its report, entitled Rent-to-Own Homes: A Win-Win for Landlords, a Risk for Struggling Tenants. “An examination of 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.”
The above comment was a response from an expert following an analysis that dealt on the uncertainty of a rent-to-own transaction for tenants. The report talks mainly about the United States rent-to-own market. On the other hand, there are only little resources concerning the run-through. There are chances that Canadians who are interested in examining R2O will discover it and think the method is just as uncertain as it is in their own market.
An investor, coach and also the owner of Innovalty Investments, Jim Pellerin said that the tenants should work hand-in-and with honest companies that will make sure that both the tenant and renter-buyer will benefit from the contract when the agreement term is over.
He said: “A standard rent-to-own transaction is simply a Lease Agreement with an option to purchase the property at a future price. This option is secured through an Option Agreement and is done so by the tenant paying an option consideration when the option agreement is entered into. These are valid contracts available through any licensed real estate office.”
He continued by saying: “Most tenants walk away with nothing, having sunk money for rent and repairs into homes they had once hoped to own,” the report said. “Others faced surprise evictions, having signed a contract that did not disclose what repairs were needed, yet set a deadline for making sure the home was up to local housing code. As different tenants move in and out of the same property over the course of years, many homes fall further into disrepair.”
“My experience is that most tenants end up purchasing the property if they are dealing with a reputable rent-to-own company. All of our properties require an onsite inspection prior to the tenant moving in. They are also strongly encouraged to conduct a full inspection by a licensed property inspection. A rent-to-own transaction should be viewed as if the tenant is purchasing the home and would be comfortable purchasing the home in the current condition.”
He commented that tenants will be protected, and it only takes a small price to make sure that the property is in good shape. Jim clarified that rent-to-own tenants are the ones that should make sure the house is in good condition. However, he added that investors that respect themselves enough should ensure the house is well managed for the renter-buyer to move in and live there.