Press Release

April 16, 2018

Contact: Richard Loconte, 212-709-1691


Alternative Home Purchase Agreements May Violate New York Laws and Regulations

Financial Services Superintendent Maria T. Vullo today announced that the Department of Financial Services (DFS) has issued a consumer alert warning New Yorkers about the pitfalls of rent-to-own or land installment contracts, factors to consider before signing a contract, and how to get legal help if needed.  The consumer alert was prompted by a current DFS investigation into 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.  Superintendent Vullo urges all New Yorkers to use caution before entering into any rent-to-own or any other form of alternative home purchase finance agreement.

“Alternative home purchase agreements often are being marketed to financially distressed consumers, promising a path to homeownership, but putting consumers at risk without the protections of a mortgage,” said Superintendent Vullo. “As the state regulator of financial institutions in New York, DFS takes very seriously its obligation to protect consumers from predatory lenders.  This alert is being issued to create awareness among consumers and to let them know that lease-to-own, rent-to-own and land installment contracts must be carefully considered under New York laws and regulations.”

DFS is concerned that consumers who desire to achieve homeownership may be vulnerable to signing onerous and illegal home finance agreements that often do not lead to homeownership. 
The DFS consumer alert notifies New York residents that lease-to-own, rent-to-own and land installment contracts may violate applicable New York laws and regulations regarding fair lending, mortgage protections, interest rates, habitability, property condition and/or real property disclosures.

The DFS consumer alert advises consumers to:

  • Consider alternatives: Before entering into one of these agreements, consumers should carefully consider whether a traditional lease is a better option.
  • Know before you sign: Consumers are further advised to learn what a company offering a lease-to-own or other alternative agreement knows about a property.
  • Protect themselves:  Consumers who live in a rent-to-own home or other similar housing may have certain legal rights, including in the event of any payment default.

The full consumer alert, including information for free legal help, can be found here.