Western Australia's Consumer Protection department has warned consumers against ‘rent to buy’ arrangements, as it seeks to shut down a third such scheme.
The Commissioner for Consumer Protection in WA said it is seeking injunctions against Presto Property Solutions and director Ms Rowan Amanda Lines, restraining them from making false representations to both buyers and sellers involved in their scheme, in breach of the Australian Consumer Law.
The Commissioner alleges that Ms Lines dealt with a Quinns Rock couple who had signed up to her scheme in July 2010 after responding to a sign “we sell houses fast” that was posted on a light pole in a street near their home.
According to Consumer Protection WA, Ms Lines had later purported to be the owner of the home when dealing with the tenant/prospective buyer. However, Ms Lines never owned the property, she had only signed an option to purchase it.
Acting commissioner for consumer protection Gary Newcombe has urged consumers considering a rent-to-buy scheme to be extremely cautious.
“In this case, the Quinns Rock couple returned from overseas almost a year later to discover the tenant/prospective buyer had sold their above-ground swimming pool which had a replacement value of more than $16,000,” Mr Newcombe said.
“This highlights the confusing nature of these agreements where the line between tenant and owner is blurred and the legal rights of all parties are unclear. There are many other risks that we are concerned about.
“Under these schemes, buyers who default on their tenancy agreement or can’t get finance to buy the property at the end of the option period are at risk of losing the money that was intended to go towards the purchase.
“We are also concerned that money paid by the buyer does not appear to go into a trust account and there is very little accountability of where the funds go or any system in place to keep track of the ongoing option payments.”