Rent-to-Own and Land Installment Contracts

New Yorkers should use caution before entering into any rent-to-own or any other form of alternative home purchase finance agreement. DFS is investigating 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. These alternative home purchase agreements often are being marketed to financially distressed consumers, promising a path to homeownership, but putting consumers at risk.

DFS is concerned that companies may be targeting vulnerable consumers, playing on their desire to achieve homeownership to get them to sign onerous and illegal home finance agreements that often do not lead to homeownership.

The DFS investigation has raised a number of concerns that any New Yorker who has signed, or is considering signing, a rent-to-own or other similar agreement should know. New York residents should know that lease-to-own, rent-to-own and land installment contracts may violate New York laws and regulations regarding fair lending, mortgage protections, interest rates, habitability, property condition and/or real property disclosures.

Consider Your Options

Residential leases and mortgage agreements are required to provide basic consumer protections. Some companies, however, claim to offer a hybrid agreement – part mortgage, part lease – that does not need to provide any of the standard consumer protections. Although a lease-to-own or other alternative home purchase agreement may appear to offer a path to homeownership, these agreements may impose harsh terms with little or no safeguards. Before entering into one of these agreements, you should carefully consider whether a traditional lease is a better option.

Know Before You Sign

Companies engaged in the rent-to-own or lease-to-own business tend to deal in severely distressed properties – homes that have been vacant for a long time and often require a substantial amount of work. Rent-to-own agreements impose all of the obligation to repair the properties, and the substantial cost of the repair work, on the consumer, whereas New York law would put such obligations on the landlord. And, if the arrangement is similar to homeownership, then the homeowner has protection under New York foreclosure law.

In addition, be careful of arrangements that create a false sense of transparency. For instance, a company may provide consumers with lockbox codes allowing them to freely tour a property to assess what work it may need. While a tour might suggest an opportunity to identify issues with a property, consumers typically conduct these inspections at a disadvantage. For example, property tours are typically conducted when the utility services are not turned on, depriving consumers of the opportunity to test whether the property has basic services.

Consumers are further advised to learn what a company offering a lease-to-own or other alternative agreement knows about a property. Although companies may tell you that they do not have any information about a particular property, some companies hire contractors to conduct inspections of properties after they have been acquired. These reports identify issues such as black mold, termites, asbestos and other health and safety hazards before a consumer has even had a chance to tour the property. So, while offering open property tours may look like a company is being fully transparent, the tours are actually just your opportunity to learn what a company probably already knows. And if you do not identify an issue, the company will not inform you.

Protect Your Rights – You May Be Entitled to Free Legal Counsel

If you currently live in a rent-to-own home or other similar housing, you may have certain legal rights, including in the event of any payment default. In New York, under the common-law doctrine of “equitable mortgage,” residents in single-family homes making lease payments while improving the condition of the home, over time, accumulate equity in the home. One consequence of that equity is that the company cannot just evict you if you fall behind on making payments. Rather, you should be entitled to the protections of a foreclosure proceeding, and if you have received an eviction notice, you should speak with a lawyer about an equitable mortgage defense.

Please see below for contact information for organizations that may offer free legal representation.

Get Help! Contact a Not-for-Profit Housing Counselor

Housing counselors that handle foreclosure-related issues can give you advice on your options and resources at little or no cost. They may also be able to negotiate with your lender for free and help you find free legal services in your area.

Housing counseling resources for New Yorkers include:

  • New York’s Homeowner Protection Program (HOPP), which connects with housing counselors and legal services at no cost. Call the HOPP hotline at (855) 466-3456 or visit
  • You can find a list of approved non-profit housing counselors by county here, on the DFS website.
  • 24-Hour assistance is available toll-free on the HOPE NOW hotline at 888-995-HOPE (888-995-4673). HOPE NOW is an alliance of HUD approved counseling agents, servicers, and investors that provide free assistance.
  • If you live in New York City, you can also call 311.

If you are in a foreclosure court case, you should consult an attorney. 

Seek Legal Assistance

Contact a lawyer and review your mortgage documents. Make sure your loan is not in violation of any laws. If you do not have an attorney, the New York State Bar Association may be able to refer you to an appropriate attorney for your situation.

If you cannot afford a private attorney, resources for free or low-cost legal assistance include:

If you are in a foreclosure court case, you should consult an attorney.

File A Complaint

Learn how how to file a complaint with DFS.