BETTENDORF- There are thousand of homes to rent in the area, but there are also options for people who'd like to own the home they're currently renting. One of those options is called a rent-to-own contract.
"I think it's good if you're wanting to get into home ownership," Mason & Scott Partner Nick Mason said Monday, September 25. "I think they're great vehicles in order to make that happen."
Mason deals with real estate law. He says rent-to-own contracts, where a tenant rents a home for a certain amount of time before buying it, can work out well for somebody with bad credit.
"It starts helping you gain a little bit of equity in something regardless of your savings," Mason said. "Equity is another vehicle for savings. Getting people to know that and understand that is really important.";
There are pitfalls to avoid when agreeing to a rent-to-own or land contract though. The National Consumer Law Center says land contracts are "built to fail, as sellers make more money by finding a way to cancel the contract..."
Mason says he sees that in bigger cities like Chicago but not the Quad City area.
Rent-to-own Contracts:
The tenant has the option of buying the home at the end of their lease.
Land Contracts:
The tenant buys the home at the time they start renting.
To avoid a canceled contract, Mason says tenants need to make sure they sign a 'notice of interest' at the county recorder's office. That would keep the landlord from finding a new tenant.
"If a seller was going to try to sell that to somebody else without the buyer on contract or the tenant in there thinking they have an option to buy, it would cloud the title on a title search if something is recorded down a the courthouse," Mason said.
To see our full interview with Mason, see the video below:
