RentToOwn-HouseFinder.com
Can the owner of a rent-to-own home use the house as collateral if we have an iron-clad RTO contract?
We are purchasing a house through a RTO agreement drawn up by an attorney. We just found out that 2 years into the contract the owner went and borrowed $80,000 using "our" house as collateral without our knowledge. Is this legal?
Public Comments
- A "rent-to-own" contract is an executory agreement for a future property right, but not a present ownership right in the property. In theory, depending upon your contract, you might "force" the owner to sell you the house at the end of your rental period, and accept the $80,000 lien in hopes that the owner will pay it off. Or, to be safe, you could insist that the title must be clear of the outstanding obligation before you take title, but your contract may not provide for this escape. You could end up losing the house or getting involved in a big lawsuit over your rights versus that of the lender and the owner. If your "rent-to-own" contract was on file with the local registry of deeds (or auditor or town hall or whoever keeps those records where you live) then the lender is already "on notice" of your superseding claim on the property.
