Bill provides greater protections to homebuyers

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The Ohio House of Representatives has released an analysis of a bill introduced by local representatives aimed at regulating land installment contracts.

State Reps. Michele Lepore-Hagan of Youngstown, D-58th, and Don Manning of New Middletown, R-59th, co-sponsored House Bill 103, which, if passed into law, will regulate land installment contracts that some companies use to exploit poor and first-time prospective homeowners.

The legislation transfers responsibility for the financial and physical condition of the homes sold using land installment contracts to the seller rather than the prospective buyer.

Under land installment contracts, buyers pay in installments to a seller before the title of a property is fully transferred to their name.

Land installment contracts are often used by individuals who are unable to secure traditional mortgages through banks. However, under current state law, buyers under land contracts do not have the same protections as individuals under traditional mortgages.

Lepore-Hagan said the bill is not “anti-land contract” but is necessary to bring “much needed regulation and fairness” to land installment contract use.

“Unfortunately, unscrupulous firms operating in this largely unregulated industry are ruining lives and decimating neighborhoods across our state,” Lepore-Hagan said. “These companies swooped into Ohio cities devastated by the collapse of the housing market in 2008, bought homes for pennies on the dollar from Fannie Mae and the banks, inflated the value of those homes, then enticed residents to take out high-interest, long-term loans the lenders knew borrowers would have little, if any, chance of repaying.”

Under HB 103, the seller in a land installment contract will be responsible for taxes, assessments and other charges on the property, as well as ensuring the property meets code enforcement standards in the community and ensuring all liens are paid off and repairs are made where necessary.

In order to ensure the properties are up to code and that contracts are enforceable, sellers utilizing land installment contracts will have to obtain independent appraisals and record the contracts with the county recorder.

Currently, many contracts are drawn up between buyers and sellers outside of the purview of the counties where they’re executed.

The bill is not without skeptics.

During a House Civil Justice Committee meeting on March 26, Manning told the committee that members of the real estate industry have been monitoring the development and progress of the bill and that he expects the bill will change in coming weeks, though he did not elaborate on the nature of those changes.

HB 103 is expected to have a sister bill introduced to the state Senate by state Sens. Michael Rulli of Salem, R-33rd, and Sean O’Brien of Bazetta D-32nd.

The state bills are also mirrored by a number of Ohio city ordinances.

Youngstown, Toledo and Cincinnati have passed city ordinances aimed at curbing exploitation through the use of land installment contracts.

Manning and Lepore-Hagan hope to see other communities pass similar ordinances in the future.

“We’re dismayed that residents of Cleveland, Columbus, Akron, Canton and other communities across Ohio are still at risk of being preyed upon by unscrupulous landlords and property management firms,” Manning said. “In fact, people living in cities that have not passed local ordinances are now more likely to be victimized as predators take aim at communities that have not regulated land installment contracts.”

On May 8, legislative committees will hear proponent testimony for the bill.

Representatives from the Alliance for Congregational Transformation Influencing Our Neighborhoods (ACTION) — whose influence played a major role in shaping the city ordinance regulating land installment contracts Youngstown approved in February — will testify on behalf of the bill.

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