In July 2007 Alberta and her husband signed a 2 year lease option agreement for a home in Hesperia, California only to find out 10 months later that the home was in the final stages of the foreclosure process and that it had entered default the previous December. At the same time they found out that the person being represented as the owner (landlord) was neither the property owner nor the owner’s representative. They had paid over $20,000.00 dollars to a scam artist with no hope of getting any of it back.
A lease option or lease-to-own agreement typically asks for a security deposit, first and last month’s rent plus a sum paid as the “option consideration” (a fee to bind the agreement) in order to occupy the property. A portion of the monthly rent is credited toward the purchase price of the home.
The problem comes in when the tenant learns the property is not only being foreclosed on and she has to move out - at least one fourth of foreclosed properties are tenant occupied – but it is often discovered at this time that the landlord rent was paid to was not the property’s owner.
How do you make sure who the owner of the property is before you turn over thousands of dollars? Check the public records at the county recorder’s office (you can do this online)…see whose name is on title for that address. Be sure you are paying rent to the correct person.
Another possible precaution to take – while you are looking up ownership for the rental property check to see if a Notice of Default has been filed against the property and just to avoid surprises later you might want to check every couple of months.
Copyright 2008 by Lynnette Phillips
May not be reprinted without permission