Editing Lease purchase contract (section)

==Controversy==

In the [[United States]], when credits are applied to a purchase price the agreement becomes a financing contract and these contracts have been identified as predatory lending arrangements under the [[Dodd–Frank Wall Street Reform and Consumer Protection Act|Dodd-Frank Act]]. Under this federal law any financing arrangement requires the purchaser of an owner occupied dwelling (one to four living units) is to qualify for any financing contract with a registered [[Loan officer|Mortgage Loan Originator]]. There are exemptions under this federal law for homeowners financing their primary residence, those in the business of [[real estate]] such as landlords are considered dealers. In all states, rent to own arrangements are no longer compliant with federal financing requirements.

Some vendors in rent-to-own transactions target vulnerable families for rent-to-own contracts, then threaten them with criminal charges in order to coerce payments that the families are struggling to afford.<ref>{{cite web |last1=Highsmith |first1=Brian |last2=Saunders |first2=Margot |title=The Rent-to-Own Racket: Using Criminal Courts to Coerce Payments from Vulnerable Families |url=https://www.nclc.org/images/pdf/criminal-justice/report-rent-to-own-racket.pdf |website=National Consumer Law Center |access-date=1 September 2022 |date=February 2019}}</ref>

For real estate transactions, alternative financing approaches such as lease-to-own carry fewer [[consumer protection]]s than traditional financing, and typically involve a higher cost for the buyer.<ref name="horowitz" />

Commercial loan arrangements are exempt from the Dodd-Frank Act, as a landlord might rent to own a property for the purpose of sub-letting to a tenant. This arrangement is not a popular arrangement but may be accomplished legally.