MORGANTOWN – In the wake of flooding in West Virginia, some families that lost their homes in the devastation are beginning to learn their rent-to-own housing agreements were scams.
Priya Baskaran, director of the Entrepreneurship and Innovation Law Clinic (ELIC) at the West Virginia University College of Law, said the rent-to-own agreements often allow people to make lower monthly payments if they agree to take on repairs and other costs that would normally fall to the landlord.
“(The scam) targets already financially vulnerable families,” Baskaran told The West Virginia Record.
Baskaran said in the many of the deals that have come to the law school’s attention, the flood victims found out that they had been scammed when they applied to get flood relief recovery from the Federal Emergency Management Agency (FEMA).
“They can’t prove that they’re the owner of the house,” Baskaran said. “People don’t even have an agreement that’s written down.”
As a result, she said these residents only qualify for recovery from FEMA as renters, which is as little as $5,500, even though many of them have put substantial amounts of money into their homes.
“It’s a bit of a shock,” Baskaran said.
Some of the scam victims were told by their landlords that they would have to use the money they do receive from FEMA to make repairs, according to Baskaran.
Also, because they are not the legal owners of the property and can’t produce a title, Baskaran said these people cannot get financial help available from charities trying to help homeowners repair their properties.
The law school and partners in the state are stepping in to do what they can for these victims.
“We need to educate people about what their rights are,” Baskaran said. For example, she said rent-to-own parties have the right to walk away from their homes, and they should not have to pay for things that are the landlord’s responsibility.
According to Baskaran, other states have a rent-to-own statute on their books that requires these agreements to be recorded. She said proponents of such a law in West Virginia are trying to find someone to put the legislation forward.
“Ideally, the solution would be legislation,” Baskaran said. “Rent-to-own situations have been cheating families into believing they are buying their home.”
Baskaran said in a news release that rent-to-own agreements are marketed to families who do not qualify for traditional home loans because of income requirements, poor credit or because they can’t afford the down payment.
She said rent-to-own arrangements lack the protection of home purchase agreements and they are written to deny protection under West Virginia’s landlord-tenant laws.
Baskaran and law students in the EILC have been researching rent-to-own situations in Rainelle. In some instances, families have been evicted from their rent-to-own homes after expensive repairs have been made.
To combat these scams, the EILC is creating a series of educational materials to raise awareness about the potential dangers and answer common questions. The materials will be distributed to residents as part of Greenbrier County’s long-term recovery efforts.