By Kevin Aldridge
Enquirer staff writer
A new law regulating the real-estate practice of offering rent-to-own homes could be on the books in Cincinnati by Wednesday.
Vice Mayor Alicia Reece and Councilwoman Laketa Cole will introduce an "anti-predatory leasing" policy today at a joint meeting of the Neighborhoods and Tourism, Health and Small Business committees. The proposed ordinance, aimed at reducing abuses related to rent-to-own or "lease-option" housing deals, would then go before City Council for a vote on Wednesday.
If passed, Cincinnati would be one of the first cities in the state with a law regulating lease-option contracts.
"This is a landmark piece of legislation that will put council and the city on record that we do not support predatory practices," Reece said. "This legislation addresses a growing problem on the city's West Side of town, where we've heard stories of people losing everything because of a bad lease-option deal. This (policy) will send a strong message that we are not going to tolerate it."
Lease-option contracts typically promise a renter a chance to buy a home after paying an up-front option fee of at least $1,000 and making rent payments for a set term of one or two years. The renters have a chance to purchase the home if they meet all the terms and conditions and secure a loan.
Reece said some contracts require renters to perform all maintenance on a home - a tactic used by landlords to shift large repair bills to the renter. She said too many unwary buyers are losing thousands of dollars through these deals.
Some real estate investor groups, however, have argued that lease-options are ideal for renters who want to buy a house but have poor credit and lack down-payment money.
City officials, real estate investors and residents from Price Hill to Camp Washington met several times during the past six months to negotiate a compromise. That compromise is the policy City Council will consider this week.
"It (the policy) makes sure that those who own property are able to provide a service," Cole said. "But it also makes sure that they don't take advantage of the citizens while providing that service."
The proposed ordinance states that lease-option agreements in Cincinnati would be subject to all the state's landlord-tenant laws. It says that the agreements must contain the words "This is not a contract to buy" and that landlords must fully disclose the condition of the property to renters.
Under the new law, contracts would have to suggest that tenants obtain a home inspection and limits the amount of the option fee. The fee cannot exceed 11/2 times the rent during the first or second year of the contract. Landlords must also disclose that the option fee is nonrefundable.
Reece said education is also a big part of the city's requirements. Landlords must make sure that tenants read the city's informational pamphlet on lease-option deals prior to signing a contract.
Failure to comply with the city's regulations could result in fines.
Hundreds of residents from Westwood, Price Hill and other West Side communities have signed a petition supporting the legislation and will present it to council.
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