Renters Warned Against Foreclosure-Related Scams

California is among the states hardest hit by the current foreclosure crisis. Hundreds of thousands of distressed homeowners ended up losing their home to foreclosure. In addition, hundreds of mortgage lenders have even declared bankruptcy when the rising number of mortgage defaults became overwhelming.

But the present situation also creates an opportunity for scam artists to prey on unsuspecting renters who have entered a lease option agreement. Some renters are swindled into giving money to unauthorized representatives of the owner while some discover that the property is in the final stages of foreclosure and the owners have deceived them.

A lease option agreement is actually an agreement between the property owner and renter for the purchase of the property – sort of a ‘rent to own’ set up. Depending on the agreement, the renter will have to pay an additional amount on top of the regular monthly rental fee. This added payment is actually credited to the property’s purchase.

If you are interested in this kind of method of owning the property you are renting out, you will have to make sure that you are dealing directly with the property owner or authorized representative. You can accomplish this by checking the property’s title and finding out the real owner at the recorder’s office of the local county.

Aside from checking the owner’s identity, it would also be wise to check for any Notice of Default that could have been filed against the property. You certainly do not want to be in a situation where the property you have been hoping to buy is repossessed by the bank.

Before signing any lease option agreement, renters should protect themselves by knowing their rights. As always, doing your homework is always an advantage. After all, prevention has always been considered to be better then the cure.

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