(WBRC) - Nakecia Stone scrolls through photos of her old home. With a flick of her finger, an image of her daughters cuddling in their bedroom flashes across the screen, followed by another of them in the front yard.
"I loved the area, I loved my neighbors," Stone said of the Clay-Chalkville home.
She says they moved to the single-family home in 2013 under a rent-to-own agreement. It required a $5,000 down payment and $1,000 per month, she said, and promised they could own the house one day in the future.
"The reason the down payment was so low was that we agreed to do all repairs," Stone said.
She recalls they spent about a month and a half cleaning the house of debris, installing new flooring and bathrooms, and refurbishing the outdoor swimming pool.
"My husband is a workaholic, so him working on the house thinking it was going to be our house…that was over the top for him," she remembered.
They enjoyed the home for about two years, until one summer day in 2015. The dream of home ownership was interrupted.
"My neighbor was coming over to see me one day and she said 'you've got a note on your door.' A note? I got the note and it says 'You've got 30 days to vacate. The house has been placed into foreclosure,'" Stone explained.
A baffling moment for Stone because she says they always paid the bills on time. But as she would learn, it was not their delinquency that cut her dream short.
The sellers had a mortgage on the home and had stopped paying the bank, prompting the foreclosure, costing the Stone family their home and investment.
"When I saw them sell it, I knew it was over," Stone said with tears in her eyes.
Some say rent-to-own property agreements, which are like lease-purchase contracts, give people who cannot qualify for a home loan an opportunity to achieve the American dream that would otherwise elude them.
But, housing lawyers say the agreements are too risky. In Alabama, there is virtually no regulatory oversight. And the agreements promising a chance at home ownership attract people who often cannot afford a lawyer to review the agreements.
"This is an area where we need some regulatory help," said Nancy Yarbrough, Executive Director of Birmingham Volunteer Lawyers. She says acquiring the deed to a home through a rent-to-own deed is "like winning the lottery."
I. Mobile trailers to single family homes: various agreements contain similar terms
Felicia Gainey fell in love with the brick home in Oxford in 2013.
"I think, 'Oh my god, yes! This is what I need,'" she recalled while sitting in her living room.
Not only is the three-bedroom home on a quiet street with maintained lawns, it also offered the chance to one day own it. In her name.
This was a lease-purchase deal, which is similar to a rent-to-own. It required a down payment of $8,000 and then a monthly payment of $850 for 36 months. The agreement allowed her to move into the home, and time to build her credit. She would attempt to secure a home loan in the future.
Gainey, who says she never owned a home before, thought it was the perfect opportunity.
And seller Donald Sills, president of Hazel Creek Properties, Inc., agreed. "A lease-purchase offers an opportunity for a family to begin home ownership as an option to a note and mortgage," he said in statement.
Sills accepted half of the $8,000 down payment with plans to collect the second half from the household's tax return.
Looking back at when he first met Gainey and her husband, he says they were employed and he had no reason to believe they would not be able to make the monthly payments. He says he hoped to one day sell them the house, like he says he did before to 5 or 6 other past buyers through lease-purchase agreements.
Gainey and Sills say payments were made as scheduled until 2015 when money was tight. Sills worked with Gainey. He reduced her monthly payments for 5 months, agreeing to accept a total of $1000 less that year. They agreed he would collect it in the future.
But then, in late 2016, the unexpected happened.
"I didn't plan on getting sick," Gainey says.
Now, she's unable to pay. Local support services helped with a few payments, but she cannot qualify for state assistance programs, like Hardest Hit Alabama, because her name is not on the deed.
"The contract has gone into serious default for one reason alone and that is non-payment," Sills writes.
A letter his lawyer delivered to Gainey in April said she owed more than $5,000, from unpaid monthly payments, a portion of the down payment still outstanding, and reimbursement for the $1000 reduction in rent from 2015.
"This is an attempt to collect a debt," the letter explains.
No different from how a tenant who stops paying rent is treated, Gainey may have to move. But, unlike a tenant, Gainey will likely lose the $4,000 partial down payment that is more than quadruple the amount of one month's payment.
"If it's a landlord-tenant relationship and the buyer was renting, the landlord can collect no more than one month's rent as a security deposit," said Chris McCary, lead housing lawyer for Legal Services of Alabama and lawyer for Gainey.
Her lease-purchase agreement explains that if Sills takes the property back, he can keep any money paid; money she thought was an investment going toward ownership.
A down payment larger than the monthly payment is typical of the rent-to-own agreements, says McCary.
Mary's agreement for a mobile home at Jemison Mobile Home Park also required a down payment larger than the monthly payment. Mary paid $2,500 down and $550 per month, plus an additional $145 to $175 for lot rent.
Mary's name is changed to conceal her identity. She fears speaking about her experience will impact her ability to find housing.
The agreement offered the chance to own the mobile home "as is" with the responsibility to maintain it. These terms McCary says are common among these agreements, too.
On a rainy Saturday, a little over a year after Mary moved to the mobile home park, she points to water damage around a window.
She says she got the mobile home without an inspection and did not know about or see water damage when she first moved in. Her fix was taping cardboard around the base of the window.
Brent Hieronymi, a lawyer for GRS Holdings, Inc., the corporation operating the mobile home park, said the responsibility for maintenance follows the assumption that the property would become hers.
But the property would not become hers.
Mary left in late May after receiving an "eviction notice" over her dogs. The notice recounts she was asked to get rid of her dogs; Mary says she owned two Chihuahuas and one boxer.
Mary did not comply, keeping them instead, until one of her dogs was reported for "apparently scratching or biting" another park resident, according to the notice. The notice also says there were complaints about dogs roaming freely outside.
Hieronymi said accounting has not been completed and perhaps some of the $2,500 down payment could possibly be returned to her.
II. How many rent-to-own agreements are there in Alabama? How successful are they? No one knows.
There are no public records showing how many mobile homes at the park have been sold through rent-to-own deals. Hieronymi could not answer the question either, because GRS only recently acquired the mobile home park.
A deed provided by Hieronymi shows GRS purchased the park in October 2016, about eight months after Mary entered her agreement with the old owners, B & G, LLC.
Hieronymi was not yet aware of how many of the homes had been sold to others, or even how many homes are on the park grounds. Tax records and aerial photos show dozens of mobile homes present.
A Facebook post from May 17 offers another mobile home at the park for lease-purchase. It asks for $2,500 down, and $675 a month, and prohibits animals.
Internet posts suggest the prevalence of the rent-to-own offerings across the state. Searching listings for about 6 hours over the course of several days revealed nearly 400 properties offered for rent-to-own.
But, the lack of public records makes it impossible to know with certainty how many properties have been sold through a rent-to-own transaction, or how many have failed.
No governmental entity tracks rent-to-own properties. The contracts are not recorded with public offices.
Lawyers in Texas surveyed about 1,300 people who had rent-to-own agreements. Their findings, reflected in the report "The Contract for Deed Prevalence Project," show that the deals failed nearly 45 percent of the time.
"The problem with a lot of these transactions is that the family never ends up with title, they never end up actually owning the home," explained Professor Heather Way, The University of Texas at Austin. "And families end up spending thousands and thousands of dollars. They think it's going towards ownership, but it's not."
The Alabama Office of the Attorney General received 99 complaints about landlord-tenant issues in 2016. These would include rent-to-own issues, though those cases are not separately counted.
Yarbrough, of Volunteer Lawyers, said her team of 500 lawyers volunteering time to help low-income people of Birmingham, assisted with more than 540 housing cases. Many, she says, were rent-to-own agreements.
And, attorney McCary estimates he gets around 40 cases of rent-to-own issues every year.
"I know it's just a drop in the bucket of what's out there," said McCary. "I may have just one case on the docket for that day, but I'll see several cases go in front of me."
And he believes there is room for success too.
"I only see the ones where the dream has been interrupted, but it could be that some that are successful," he said. "It would be hard to predict the other way how many are successful. There's no regulation of it, there's nothing to keep up with it," explained McCary.
But Yarbrough isn't as optimistic.
"It's like winning the lottery," she said of getting deed through a rent-to-own deal.
III. Losing the house can happen in under a month.
When there's a breach of a rent-to-own agreement, through non-payment or otherwise, and a lawsuit is filed, usually it's in district court. It's called an "unlawful detainer."
"It is a fast mechanism, probably the fastest we have in Alabama to get someone off the property," said attorney McCary. Someone can be forced out of the home in under a month.
Landlords file unlawful detainer actions on the fast track against tenants when agreements do not make the promise of ownership and don't require larger down payments.
But lawsuits against property owners, where there is an ownership interest, a deed or mortgage, must be filed in a different court, called the circuit court. There, the process can take months.
McCary says when sellers in rent-to-own agreements sue, they typically file on the faster track in district court.
"I would assume that's why some try to file in the district court," said Judge Robert P. Bynon, Jr. He presides over the district court for Jefferson County in Birmingham.
"Sometimes, you have a seller trying to take advantage of a buyer, or a buyer trying to take advantage of a seller, and you've got to work in good faith with one another. That's the only way this is going to work," Bynon explained.
When he sees disputes over rent-to-own agreements filed in the district court, he throws them out.
"That's got to go to circuit court for an ejectment action. It's a completely different process and it takes a little longer than an unlawful detainer," said Bynon.
But many times it's hard to know when to toss the case because often buyers represent themselves and may not know the significance of the down payment they made, and how that could potentially get them more time in circuit court.
"Sometimes, nobody, the seller nor the buyer, will not tell the court that they paid $20,000 down to have the option to buy and rent this house. You find out way after the case is over with," said Bynon.
And that's how, McCary says, buyers in the rent-to-own deals are often forced out of the home on the fast court track.
"Over the 90 percent of the time, they treat them like a tenant," explained McCary. "Someone can be out in under a month."
IV. Other states regulate
At least 9 other states regulate rent-to-own agreements. The regulations vary widely, and at least one state, Maryland, attempted earlier this year to enact more.
Texas, Iowa, and North Carolina require that the agreements be recorded with the land records office.
Yarbrough, of Volunteer Lawyers, sees value in that. "At the very least, there should be some requirement that they are recorded," said Yarborough.
Recording could allow the agreements, their successes and failures, to be tracked.
Texas and North Carolina also prohibit offering properties that are mortgaged for a rent-to-own deal.
And, when the agreements fail, Oklahoma, Iowa, Ohio, and Texas ban sellers from using quick eviction proceedings, like landlords can use for delinquent tenants.
For more details about the states mentioned above and their regulations, click here.
V. Rent-to-Own: "There's little attention to it."
Rent-to-own deals could provide home ownership to people who can't qualify for mortgages or bank assistance, but it's impossible to tell how often that's the success story.
"This is a subject that's not being covered anywhere. There's little attention to it," said McCary. "I thought I should speak up to it to shine a spotlight on it."
Nakecia Stone's family was fortunate to have community support in recovering from losing their home. School officials, a church, and volunteers banded together to find the Stones a new place to live.
They've resettled in Birmingham. Stone says their name is on the deed.
But even from the living room of the new house, Stone continues to feel the emotional and financial strain from losing the Clay-Chalkville house.
"It's hard to bounce back from it," she explained. "We still, to this day, still haven't got financially stable back to where we need to be."
"How do you tell a family that they have a home and then they don't? I don't feel like that's right."