Rent-to-own becomes raw deal

Q: We are renting a single-family home that we thought we might want to buy. When we signed the lease two years ago, we paid the landlord several thousand dollars for an option to purchase the home at a commercially reasonable price. Last month, the landlord put the home on the market, and we jumped at the chance to buy it. But now we've learned, through the disclosures, that it has significant structural damage that wasn't evident all the while we lived here. We're not going to buy it, but we want to know -- can we get that option-fee back? Had we known then what we know now, we wouldn't have paid for the option. --Tom and Mary Z.

A: Residential property sellers and their brokers are subject to numerous inspection and disclosure obligations regarding the physical condition of the property, about everything from the presence of lead paint or asbestos to "natural hazards" of the area (such as being in a special flood zone), the age of the roof, and even the quality of the home's insulation.

In some states, sellers must even disclose known nonphysical problems that have proven important to buyers, such as whether anyone has died on the property. These disclosures can make or break a sale, and failure to disclose something important can undo the deal or make the seller liable to the buyer for damages.

What's not so clear, however, is whether the duty to disclose is triggered when a landlord-owner signs a lease giving the tenant an option to buy. In some states, like California, the answer is yes. In these states, a landlord who signs a lease with an option to buy is in the same position as any other seller.

And in these states, the landlord's failure to disclose something as significant as major structural damage should mean that you get your option-fee back. You'll need to check with your state's department of real estate to find out whether your state treats options this way.

Q: I've been renovating my single-family rental and doing the work myself. Naturally, I have construction materials and debris on the property, including a pile of lumber pieces that I'll eventually cart off to the dump. Yesterday, my neighbor came by to tell me that his 7-year-old son was playing with the wood and fell onto a piece that had a protruding nail, which punctured his leg. The little fellow endured a painful visit in the emergency room and may need further treatment. My neighbor says I'm responsible and should pay for the visit. Can this be so? Wasn't the parent responsible for failing to monitor his child? --Dale S.

A: Property owners have a duty to maintain their property in reasonably safe condition so that their guests and business invitees aren't injured. For example, landlords must fix broken steps, cracked windows and anything else that poses an unreasonable risk of harm, particularly if the risk isn't evident. If the landlord fails to keep things safe and a tenant or tenant's guest is injured as a result, the landlord can be held liable. ...CONTINUED

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