For some reason, I have been seeing and hearing lots of commercials for Divvy, which is a company that allows people to rent to own a home. It sounds like a sweet deal. They buy the house, then you pay a set amount for rent, which includes extra to build up your downpayment. After a few years, Divvy sells you the house that you've been renting and wanted to buy all along.

A significant number of consumers cannot afford to purchase outright certain consumer goods, such as furniture, major appliances, or home electronics, and are unable to obtain credit for such purchases. This has given rise to the so-called "rent-to-own" (RTO) industry where merchants, often targeting low income consumers, rent merchandise to consumers, who may then ultimately acquire the item by making periodic rental payments for a specified period of time.

But, are rent to own homes legal in New York State?

Photo by Windows on Unsplash
Photo by Windows on Unsplash
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According to the New York State Attorney General, rent to own purchases end up costing much more than traditional methods of purchasing. The New York Department of Financial Services warns consumers,

New Yorkers should use caution before entering into any rent-to-own or any other form of alternative home purchase finance agreement. DFS is investigating whether alternative home purchase agreements, such as rent-to-own, lease-to-own or land installment contracts, being offered in New York constitute unlicensed, predatory mortgage lending. These alternative home purchase agreements often are being marketed to financially distressed consumers, promising a path to homeownership, but putting consumers at risk.

Photo by Anastasiia Chepinska on Unsplash
Photo by Anastasiia Chepinska on Unsplash
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The department says that these types of contracts may violate laws and restrictions in New York, including,

- fair lending
- mortgage protections
- interest rates
- habitability
- property condition
- real property disclosures

The bottom line is before you enter into any rent to own home agreement, do your research! You can also get free legal housing resources:

- New York’s Homeowner Protection Program (HOPP) - (855) 466-3456 or homeownerhelpny.com
- 24-Hour HOPE NOW hotline - 888-995-HOPE (888-995-4673)

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