See 15/3/14 addition to this post
This post focuses primarily on rent-to-buy house deals, but it also applies to some other complex or high-risk consumer contracts.
I’ve explained how some rent-to-buy deals work, and what the risks are for buyers and some sellers. So, aren’t these problems with rent-to-buy houses the buyer’s fault if they don’t get legal advice? ( I use the terms “buyer” and “seller” to also refer to parties in an ‘option to purchase’ contract).
Obtaining advice may be discouraged
I’m not aware of any buyers being prevented from obtaining legal advice, but selling techniques which employ trust and reciprocity and suggest scarcity and urgency may reduce the likelihood that the buyer will seek independent legal advice. I hope to write more about these selling techniques in a later post.
Buyers may not be able to afford legal advice.
Sellers or intermediaries are aware of the buyer’s financial circumstances, and will know whether the buyer can afford to obtain legal advice once any deposit or option fee is paid. In fact the seller or intermediary may base the fee on the total funds the buyer can obtain.
For example, on page 131 of “How to Buy a House for $1”, Rick Otton gives an example of a hypothetical conversation with a buyer, which includes this:
You: “How much up-front money would you have to get started?”
Them: “Around $5,000” (Click)
You: “Up to…?” (Pause)
Them: “$8,000” (Click)
You: “But no more thaaaaan…?”
Them: “Actually, we’ve got $8,200”. (Click)
Assuming the buyer must then find money for moving and other costs, it’s difficult to see how this buyer could afford to pay for independent legal advice. Continue reading
The Naysayer 