RISK OF RENT-TO-OWN REAL ESTATE

The risk is ridiculous for a Buyer who takes an Agreement for Deed because then the Buyer is truly subject to whatever’s going wrong in the Seller’s financial life.  An Agreement for Deed or a Rent-To-Own, lets the Buyer make payments towards a property, eventually to own that property once enough payments are made.  In a twenty year financing plan, that’s a long time for things to go wrong.  

David and Sam were friends.  David was just starting out and wanted to buy a home from Sam, but he didn’t have the money for a downpayment.  So Sam said he’d sell it on a Rent-To-Own basis.  Seemed easy enough.  David would spend the next twenty years paying Sam, and at the end of that time and those payments, David would own the property.  

But Sam got into a whole bunch of gambling debts, didn’t pay tax on the property, and had an IRS lien filed against him.  David and Sam got very drunk that night, but it didn’t help either man out of financial troubles.  In the hangover, Sam owed a lot of money, but David lost his home and all the money he’d faithfully paid into it.  David had no equity in the property, and nothing saved up because he’d been making those payments.  Through this Rent-To-Own deal, a friend in need had become a friend without a deed.  

From Land Title Talk Podcast -- https://youtube.com/live/A5KWV-ao_zg

September 3, 2025

Content by Stephen Collins and CJ Godwin