SitemapLand contracts – also known as rent-to-own or lease-to-own agreements – have plagued local officials in the fight against blight and caused headaches for tenants who often struggle to stay afloat, local officials have said.
State Rep. Michele Lepore-Hagan of Youngstown, D-58th, introduced “The Fair Lending through Land Contracts Act” Wednesday, which aims to protect prospective homebuyers and communities where land contracts are prevalent. “Companies swooped into Ohio and other states devastated by the collapse of the housing market, bought homes for pennies on the dollar, inflated the value of the homes, then enticed borrowers to enter into high-interest, long-term loans they have little, if any, chance of repaying,” Lepore-Hagan said in a statement. Ian Beniston, executive director of Youngstown Neighborhood Development Corp., said not all land contracts are bad, but the legislation would help prevent predatory models. The Vindicator documented the process in an article last year. In a typical scenario, an investor will purchase a home for $3,000 and turn around and offer it to a buyer for $3,000 down and $200 a month over 10 years. The party issuing the land contract still holds the deed, so if the buyer under the contract defaults on a payment, the issuer keeps the money collected and the home. In addition to providing buyers with legal recourse, Lepore-Hagan’s legislation would require companies to make repairs to comply with local building codes prior to issuing land contracts. In Youngstown, many out-of-state companies purchase foreclosed homes and began marketing land contracts without making repairs.
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