This week Jon talks with Notre Dame Clinical Professor of Law Judith Fox about her work as the Director of Notre Dame Economic Justice Clinic and a former Consumer Financial Protection Bureau Advisory Board member to protect individuals from predatory actors in the rent-to-own housing market.
Rent-to-own housing is something that sounds like a panacea for the affordable housing crisis being experienced in California. The exact types of contracts vary, but generally a rent-to-own contract – also known as a land contract – will have a much lower down payment than a traditional mortgage – something in the ballpark of 7% instead of 20% – and then there will be an option to buy the home at the end of a predetermined lease period.
If that sounds too good to be true, that’s because often it is. Some of the more predatory actors in this segment of the housing market will saddle the occupant of the house with all the responsibilities of home ownership – paying for repairs minor and major, paying property taxes, etc. – while not passing on the benefits of home ownership to the occupant, like allowing the to use the equity in the home to pay for repairs or extending the occupant the protections a traditional renter may have from actions like eviction. Worse, often these contracts will include mandatory arbitration clauses where the owner is the arbiter, and then states that the next course of action is to corporate mediation – where filing fees can be as high as $20,000. So basically, if you have you a legal complaint you want resolved, you have to take it up with the landlord first. And if you don’t like their decision? Tough.
That’s a brief overview of the issue. Prof. Fox covers many other shady and deceptive practices these predatory actors will utilize, as well as outlines numerous ways consumers can protect themselves from actors like these if they enter the rent-to-own housing market.
To learn more about Professor Fox, you can visit her University of Notre Dame faculty page or her SSRN page. And also be sure to check out Notre Dame’s Economic Justice Clinic, of which Prof. Fox is the Director.
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