You’ve probably heard or seen the rent-to-own advertisements online as a potential solution to not being able to afford buying a home—but you probably haven’t heard how they have been used to trick many people into spending money, time, and effort into a home that never ended up being theirs.
What is rent-to-own?
Rent-to-own is a special kind of agreement where you plan to own the home after an agreed amount of time with the seller. Think of it like leasing a car that gives you the option to buy it right before the lease is over. If done correctly by both parties, the option can be a beneficial deal for those involved. However, there have been some bad apples in the rent-to-own market that have taken advantage of many people who expected to be homeowners.
What are the risks?
Most contracts for rent-to-own homes are much less forgiving than the conventional rent or purchase leases we are used to seeing. People sign contracts for deeds, where the buyer purchases an agreement for the deed rather than buying the deed itself. If the tenant does not fulfill the details of the deed to the letter, the contract is breached and the seller has every right to evict you and keep all the equity you’ve put in the home.
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In a 21-year study conducted by the Texas Department of Housing and Community Affairs, less than 20% of would-be buyers became homeowners. Almost half of them had defaulted on their payments and had their…
