PEORIA — A measure sponsored by two Peoria lawmakers would offer new protections for people who enter into "rent-to-own" leases.
Gov. Bruce Rauner signed Senate Bill 885 on Friday. It's designed to regulate contract-for-deed sales in which individuals gradually build up equity in a home with their monthly rent payments to the owner, eventually becoming the property owner themselves.
State Sen. Dave Koehler and state Rep. Jehan Gordon-Booth, both Peoria Democrats, said that the aim is to prevent people — particularly in now-income areas where people might have difficulty getting traditional bank financing — from being taken advantage of by unscrupulous sellers.
"Deceptive lending practices are a recipe for financial disaster," Koehler said Friday night. "'Rent-to-own' leases are often misleading and will hit consumers with ballooning costs and hidden fees. This new law brings transparency to consumers and guarantees they are armed with enough information to make a well-informed decision."
The legislation requires individuals selling three or more homes on a contract-for-deed basis — effectively limiting it to people who are in the business of such sales — provide buyers with an amortization schedule so they know how quickly they are building up equity in the home, and lays out the process for foreclosure more strictly.
The bill passed both houses of the Legislature unanimously, and was the product of lengthy negotiation with groups representing real estate agents, lending organizations, affordable housing agencies and the state attorney general's office.
The bill becomes effective Jan. 1, 2018.