South Carolina Real Estate Deals Leaves "Rent To Own" Tenants & Straw Buyers Holding The Bag

WSPA News Channel 7 in South Carolina reports on a Simpsonville real estate operator named Buy Now Properties, who reportedly peddles a "lease-to-own" (rent-to-own) program and who, according to the story, has a number of unsatisfied customers.

One customer says she paid $4500 down, plus monthly rent to Buy Now Properties, and now she's getting letters, first saying her lease was transferred to one company, then to the actual property owner, which the customer says she didn't know existed. That letter says she must now pay a much higher rent or buy the house, neither of which she can afford.

A similar story was told by a couple involving a $3,000 downpayment. Kathy Barrett, President of the local Better Business Bureau, says it has heard the same story from more than a dozen tenants of Buy Now Properties.

In addition to the alleged screwing over that the tenants are claiming, it appears that the "lease-to-own" program may have been part of a larger operation also involving a "straw buyer" investment program. According to the story:

• This situation not only affects credit-challenged people trying to buy the homes. It affects people with good credit who tell us they agreed to let Buy Now Properties pay them thousands of dollars to use their credit to buy the homes.

• They say Buy Now Properties was supposed to use the tenants' rent to pay the mortgages. Some say they have 12 to 15 homes in their names and gave us bank statements showing some mortgage payments that were not made. They say the homes are going into foreclosure. Said Barrett, "The investors we've talked so far have been devastated, many are telling us that they're probably going to have to file bankruptcy."

The picture that's been painted here is that Buy Now Properties arranged for straw buyers to buy homes and agreed to manage the homes by placing tenants into the homes by offering a "lease-to-own" program. It collected monies from the tenants to be applied to the straw buyers' mortgage payments, but apparently mortgage payments have reportedly gone unpaid.

The story is silent as to whether Buy Now Properties pocketed any money when arranging the initial home purchases by the straw buyers. This sounds like the beginning of a painful mess.

For more, see Buy Now Properties: From Lease to Loss.

For story update, see Consumer Investigation: Warrant issued in Buy Now Properties case - An arrest warrant has been issued and a lawsuit has been filed against Douglas E. Johnson, who runs the rent-to-own home company, Buy Now Properties, in Simpsonville.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta