Lease-to-own or lease-to-lose?
My series on landlord-tenant hell lives on through the internet and gets occasional hits. I got a comment that was longer than two (maybe three) blog entries put together. It was about a lease-to-own agreement gone bad.
I published the whole comment on the entry, but I will summarize here:
Dawn writes:
She had a lease to own agreement with a landlord. Her family moved into the place this March. They lived in the whole multi-family property and she paid rent. They did improvements to accommodate her elderly mother. (They do home improvement as a business; value of the work is $15,000.)
The landlord asked to come in with an appraiser at the end of June. Landlord said he was taking a loan out on the property. He asked for rent a day or so early.
Turns out -- you guessed it -- the seller was in foreclosure. The property value was down about $80,000.
The landlord then offered a short sale deal for the appraised amount, plus a side gift of the rest of what the place was “worth.”
These lease-to-owners finally had the light bulb go on. They didn’t pay him the next month’s rent. They called a lawyer. They are now buying the place as a short sale, with some legal help.
Once they scratched at the veneer of the “nice old landlord” they realized that things have never really been right there. The landlord asked for rent in cash. The landlord asked them to take out a second mortgage on the property for $70,000. Then a little research showed that the landlord borrowed for this property as a primary residence when it was clearly investment. He also had an old criminal drug procession charge (from the 60s.)
I have a million questions about this story. The biggest ones are about the lease-to-own agreement. Was there one? What did it say? How did the buyers get one without a lawyer? Are they buyers bound to it and the price in it?
What experience do you have with lease-to-own? In my practice, I have found them a can of worms. Every time one of my clients approached one, the attorney involved found too many problems and the purchase failed. Yet I have friends and family who happily bought this way.
