This article provides general information about pitfalls of rent to own agreements while taking mobile home for rent. For specific legal advice about a problem you are having, get the advice of a lawyer.
Landlord exploitation of tenant
Many people who sign rent to own agreements end up evicted and lose all the money they put into the home. A rent-to-own home may seem like a good choice if you want to buy a home right now but need a little time to save for a down-payment or build up your credit rating. Some landlords sell the same home over and over again. Tenants sign a rent-to-own agreement, move in, and fix up the home. After six months or so, the landlord finds a reason to evict the tenants and keeps all of their money and their improvements. Then the landlord gets someone new to sign a rent to own agreement.
Lawyer assistance to Read the rent-to-own agreement
Read the rent-to-own agreement and get the assistance of a lawyer to read it. The rent-to-own agreement is both a lease and a purchase offer in one set of papers. It is sometimes called a lease/purchase or a lease with an option. Usually the rent to own agreement will also say that:
1. In order to get a rent credit, tenant has to pay his rent on or before the due date of his lease, usually the 1st of the month. Any payment made after the due date will give tenant 0% rent credit toward his home purchase for that month, a late fee may apply, and tenant will not be building any equity in the house. That means none of his rent money will go towards buying the house.
2. Maintenance of the home is your responsibility as the tenant-buyer. This includes things like broken windows from stones or baseballs, clogged drains, peeling paint, broken appliances, burnt out bulbs, lawn work or snow removal. Any major repair that the house needs to be in livable condition is the owner’s responsibility. Many landlords will try to force tenant to pay for these major repairs as well.
3. Tenant must often pay a deposit that the landlord calls an Option Consideration. Option Consideration can be 2.5% to 7% of the sale price of the home. It is usually a non-refundable payment, of which 100% is supposed to be put toward the sale price of the house. It is not a security deposit. If tenant does not buy the rent to own home at the end of the lease term, or if he is evicted before he can buy the home, tenant will lose all of the money that he paid for the option.
Tenants ended up evicted
On October 2, 2005, a reporter for tribune wrote an article about a large lease-to-own program that had caused lots of complaints. Over a 5-year period hundreds of deals were made under this program but very few houses were bought. In fact, there were more evictions than houses bought. The contract used in this program made it easy for the seller to evict the tenant and make another deal with new hopeful buyer.