Beware of "Lease To Own" Scams For Your Home

  Over the past several years, home owners have been presented with "lease to own" schemes for everything from water heaters and furnaces to central air conditioners and more as an affordable way to acquire new and often costly components for your home. But beware, these offers come with a price and a steep one at that.

  Let's face it, not everyone has $4,000 or $5,000 lying around to purchase a new furnace when their quits in the dead of a cold January night.  As such, getting a new furnace for a low monthly fee seems very attractive and likewise when you'd love to have central air when the temperature is 30 degrees plus but your bank account is showing a minus balance.  I had a salesperson knock on my door one night offering me the opportunity to get a high efficiency natural gas furnace for a low monthly fee on a lease to own basis.  Just out of curiosity I listened to their pitch only to find more holes in the their proposal than a wool sweater housing a colony of moths.  In this case the salesperson was attempting to sell the whole concept on the natural gas that I would save with a new high efficiency furnace.  The natural gas savings were touted as literally paying the lease payments.  Upon further examination however a $4,000 furnace was costing in the end about $10,000.  Most of these programs offer no prepayment privileges if you want to buy out the lease fine but you have to pay off the remaining balance so there is no savings in interest.

 I have faced this issue more than once when listing and selling homes.  Two years ago as a member of the Ontario Real Estate Association committee that drafts and revises the real estate forms used across the Province, we revised the Agreement of Purchase and Sale to address this issue. Sellers are required to disclose any equipment on their property that is not owned.  Rented water heaters are typically not an issue but furnaces, central air conditioners and elaborate home security systems due to their cost are.  One home currently listed for sale by my office has an outstanding bill well over $10,000 for rent to own equipment in the house and this will have a real impact on the sale price.  

  The bottom line is if someone calls or comes knocking on your door with a proposal to replace your furnace or another critical element of your home on a rent to own basis, be very very careful of what you sign up for.  If you have any questions about this subject please feel free to Contact Me.