THE CONTRACT SALES ORDINANCE IMPROPERLY LABELED
THE RENT-TO-OWN ORDINANCE
by Bill Lynn, Fifth Ward Alderman

Recently the Quad City Times reported on an ordinance the city passed covering contract sales.  This ordinance gave the city more leverage in dealing with bad properties.  This ordinance was incorrectly labeled the “rent-to-own ordinance,” and some individuals misconstrued this improperly.  I suspect this has something to do with election year politics.

Simple Intent
The intent of the ordinance was simple.   Under the previous ordinance, any property sold on contract was not subject to rental inspection even if it was sold for no money down.  We found that many houses were being sold this way, and some were in bad condition.  I asked the legal department to draft an ordinance that would make any house sold for less than 3% down subject to rental inspection.  We estimated that over the last five years there were about 350 of these houses. 

Process of the Ordinance
This, like all ordinances, had three readings over a six week period.  Staff was asked for input and they indicated no problems with the ordinance.  We especially asked the fire and police department for input.  They indicated no problem.

Explanation of the Ordinance
Since the issue was how much equity people had in their homes, the ordinance indicated that if the person stayed in their home for five years and made payments, they would probably have 3% equity.  We did not want to continue to inspect all contract sales over the entire life of the contract because these people would be building some equity with each payment (much like a mortgage).  Because a rent-to-own agreement is a contract, it turned out it falls under this.  (I did not understand this, but the city attorney has explained that this is a contract sale also, because if the conditions are met, it transfers ownership.)

Some View a Problem
Because of that provision, some people felt it was a problem.  Some of the complaints the council heard about were past problems that were actually due to the old ordinance which did not allow us to inspect contract sales.  The houses brought up as examples were not rent-to-own properties—they were indeed recorded contract properties.

Everything Was Above Board
There was no attempt to pass this secretly.  This was done like all ordinances and there was plenty of time for input.  I will admit that one thing slipped by me and that was that we did not require the sale be recorded.  The old ordinance required that, but somehow got left out of the new ordinance. 
Attempt to Fix It
I made a motion to fix the issue of recording the contract and I also had language included that would have required contract sellers that did not obtain the necessary 3% down to attend the crime free housing class.  This amendment was tabled.

This is a good ordinance that was misconstrued by some people.