Legal Question in Real Estate Law in California

Much as with any other business or business-deal proposal, you formulate and carry out a series of tests designed to increase or decrerase your confidence that the deal is likely to be good for you, or bad for you. Here is a short list of tests you might want to apply here:

1. What does the Better Business Bureau know?

2. How long has the promoter been in business?

3. How long has the promoter been in this business?

4. What can the promoter's other clients tell you about their experiences?

5. Does the promoter have a current and unblemished license from the Dept. of Real Estate?

6. When will you be getting recordable title?

7. Will the promoter furnish truth-in-lending or other RESPA disclosures?

8. What is the implied (built-in) interest rate?

9. How much more than fair (current market) rental will you be paying?

10. Is the home one that you would select if you were paying all cash?

11. Is the promoter the owner of the homes?

12. Is the promoter financially stable enough to carry out its end of the bargain?

13. Is the promoter heavily borrowed?

14. How much will you be out if you have to move in a few years?

15. What has been the experience of other rent-to-own programs?

If you can get answers, or find out that there aren't answers, to these and similar questions, the deal may pass - or flunk - your "smell test."

Anyone with any significant real estate experience will tell you that rent-to-own real estate is invariably a bad deal for either the landlord/seller or the renter/buyer. It is nearly impossible to craft a rent-to-own deal that is a good deal for both, because any seller who is realistic about the value of their property can sell it; if they have to rent-to-own it it means they are looking for a way to unload it at too high a price or to get the higher price through unfair rents, or they are essentially charging incredibly high interest for a seller carry-back loan. And if you are a renter who actually finds a rent-to-own seller who is giving you a fair deal, you have to ask what's wrong with the property or the seller that they can't just sell the property for its reasonable value. So even if it is not a criminal operation, if you are talking about a big operation heavily advertising on the internet (oh, say by spamming all over Craigslist maybe?) who do you think it would be a bad deal for? There are plenty of rip-offs that are perfectly legal and legit, like . . . oh . . . say . . . rent to own appliances?