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Rent-To-Own Contracts Catch Eye Of Franklin County Recorder

This home was being leased as part of a rent-to-own contract, before the owner made a clerical error and was suddenly evicted.
Adora Namigadde
This home was being leased as part of a rent-to-own contract, before the owner made a clerical error and was suddenly evicted.

The Franklin County Recorder's Office wants to increase transparency with "rent-to-own" home deals. The effort follows WOSU’s reportingon what city officials and housing advocates call "the new form of the foreclosure crisis."

"Rent-to-own" agreements, or leases with option to purchase, are similar to land contracts but they are not legally required to be filed with the Franklin County Recorder’s office. And since rent-to-own transactions are not required to be filed, it is impossible to track how many exist. 

Franklin County recorder Danny O'Connor wants to keep a closer eye on these contracts.

“We’re spending some time encouraging folks to record leases, and to record the types of options they have at the end, because it ensures renters have as equal of footing as landlords do because of any discrepancy that might come up in forms,” O'Connor says.

A land contract guarantees that someone all along is on the pathway to having equity. But under rent-to-own, there are no such guarantees.

Under rent-to-own leases, buyers put money down and then make monthly payments until they're able to execute the option to purchase. If they miss so much as one payment, though, they can be evicted and lose all their investment.

Even if they make it to the purchase stage, many would-be buyers lose their money and end up with no equity - often because of a seemingly minor error.

"It doesn’t always guarantee that they’re going to have an opportunity to purchase a home at the end,” O’Connor says. “Obviously, sometimes with a rent to own scenario, clerical errors, immaterial mistakes can cost a family the significant opportunity they were thinking they were gonna have for a large term, a few months or years sometimes.”

Rent-to-own agreements are more becoming more common in lower-income areas. But companies that offer rent-to-own contracts defend them as a viable alternative to home ownership for people with bad credit. They also say they’re seeing more interest from people with good credit who want access to more homes amid the tight housing market.

Still, O'Connor says people using this home ownership route should visit his office and record the leases even though they don't have to.

“Because that ensures that a trusted entity like ours has that paperwork on file,” O’Connor says. “And we can guarantee that if there’s any discrepancy as to what the term was, we can bring that out and demonstrate, ‘Hey, you know what, this person’s been doing things right all along.’”

O'Connor says this will put tenants on more equal footing with landlords.

“I don’t want to see landlords taking advantage of folks and reneging on the contracts they’ve agreed to already,” O’Connor says.

If the Recorder's office can prove there's any discrepancy as to the contract's terms, it wants to be able to demonstrate that legally.

Do you have experiences with rent-to-own agreements? Do you have questions about home contracts that you want WOSU to answer? Ask your questions below, and we'll use them as we continue our investigation.


Adora Namigadde was a reporter for 89.7 NPR News. She joined WOSU News in February 2017. A Michigan native, she graduated from Wayne State University with a B.A. in Broadcast Journalism and a minor in French.