Residential Rent to Own Protection Act

II 116TH CONGRESS 1ST SESSION S. 571 To provide the Bureau of Consumer Financial Protection with the authority to regulate land contracts, and for other purposes. IN THE SENATE OF THE UNITED STATES FEBRUARY 26, 2019 Mr. MERKLEY (for himself and Ms. SMITH) introduced the following bill; which was read twice and referred to the Committee on Banking, Hous- ing, and Urban Affairs A BILL To provide the Bureau of Consumer Financial Protection with the authority to regulate land contracts, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Residential Rent to 4 Own Protection Act’’. 5 SEC. 2. REGULATION OF LAND CONTRACTS. 6 (a) DEFINITIONS.—In this section: 7 (1) BUREAU.—The term ‘‘Bureau’’ means the 8 Bureau of Consumer Financial Protection. 9 VerDate Sep 11 2014 23:17 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S571.IS S571 kjohnson on DSK79L0C42 with BILLS 2 •S 571 IS (2) COVERED CONTRACT.—The term ‘‘covered 1 contract’’ means a land contract, contract for deed, 2 agreement for deed, rent to own contract, lease pur- 3 chase, lease option, hybrid lease, or other similar in- 4 strument related to a property located in a State. 5 (3) STATE.—The term ‘‘State’’ means any 6 State of the United States, the District of Columbia, 7 the Commonwealth of Puerto Rico, Guam, American 8 Samoa, the Trust Territory of the Pacific Islands, 9 the United States Virgin Islands, the Commonwealth 10 of the Northern Mariana Islands, and any other ter- 11 ritory or possession of the United States. 12 (b) RENTAL HABITABILITY REQUIREMENT.— 13 (1) IN GENERAL.—Any property that is the 14 subject of a covered contract shall be maintained in 15 a habitable state, as determined by applicable State 16 and local habitability requirements, by the seller of 17 the property at all times until the purchaser of the 18 property— 19 (A) has fully paid the obligations of the 20 purchaser under the covered contract; and 21 (B) obtains title to the property. 22 (2) REFUND REMEDY.—If a property that is 23 the subject of a covered contract does not comply 24 with paragraph (1)— 25 VerDate Sep 11 2014 23:17 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S571.IS S571 kjohnson on DSK79L0C42 with BILLS 3 •S 571 IS (A) the fair rental value of the property 1 shall be deemed to be zero; and 2 (B) the purchaser of the property shall be 3 entitled to a refund from the seller of all 4 amounts paid pursuant to the covered contract 5 for the period during which the property was 6 not habitable. 7 (c) RELIEF TO SELLER ONLY AVAILABLE THROUGH 8 A JUDICIAL PROCEEDING.—Notwithstanding any other 9 provision of law, the seller in a covered contract may ter- 10 minate the purchaser’s right to purchase the property that 11 is the subject of the covered contract or right of possession 12 only upon determination by a court of competent jurisdic- 13 tion that the purchaser is in material breach of the con- 14 tract. 15 (d) PROHIBITION ON EVICTION OR EJECTMENT.— 16 (1) IN GENERAL.—Except as may be ordered in 17 a judicial proceeding, the purchaser in a covered 18 contract may not be evicted or otherwise ejected 19 from the property that is the subject of the covered 20 contract. 21 (2) DAMAGES.— 22 (A) IN GENERAL.—A purchaser with re- 23 spect to a covered contract that is terminated 24 through a judicial proceeding may bring a claim 25 VerDate Sep 11 2014 23:17 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S571.IS S571 kjohnson on DSK79L0C42 with BILLS 4 •S 571 IS or counterclaim to enforce a violation of para- 1 graph (1) in a civil proceeding. 2 (B) AMOUNT.—If a purchaser described in 3 subparagraph (A) is the prevailing party, the 4 court shall award actual damages and attor- 5 ney’s fees to the purchaser. 6 (e) RECORDING.—Not later than 45 days after the 7 date on which a covered contract is signed, the seller in 8 the covered contract shall record the covered contract in 9 the applicable local governmental office that records land 10 records. 11 (f) STATE LAWS.—Nothing in this section shall be 12 construed to annul, alter, or affect any provision of State 13 law if the protection that the provision of State law pro- 14 vides to purchasers in covered contracts is greater than 15 the protection provided to those purchasers under this sec- 16 tion. 17 (g) APPLICATION.—This section shall not apply to a 18 covered contract if— 19 (1) the seller in the covered contract is a person 20 described in section 501(c)(3) of the Internal Rev- 21 enue Code of 1986 for the 3-year period before the 22 date on which the seller enters into the covered con- 23 tract; 24 VerDate Sep 11 2014 23:17 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S571.IS S571 kjohnson on DSK79L0C42 with BILLS 5 •S 571 IS (2) the sale price is not higher than the amount 1 the seller paid for the property that is the subject 2 of the covered contract; and 3 (3) no interest is charged. 4 (h) CIVIL PENALTY.—A seller with respect to a cov- 5 ered contract that violates the requirements of this section 6 shall be liable to the purchaser in the covered contract in 7 an amount equal to— 8 (1) the greater of— 9 (A) the actual damage caused to the pur- 10 chaser by reason of the violation; and 11 (B) $10,000; and 12 (2) the costs of any civil action and attorney’s 13 fees. 14 (i) REGULATIONS.—Not later than 1 year after the 15 date of enactment of this Act, the Bureau shall promul- 16 gate regulations to carry out this section. 17 (j) GAO STUDY.—Not later than 1 year after the 18 date of enactment of this Act, the Comptroller General 19 of the United States shall conduct a study and submit to 20 Congress a report on— 21 (1) the size and scope of the covered contract 22 market; and 23 VerDate Sep 11 2014 23:17 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S571.IS S571 kjohnson on DSK79L0C42 with BILLS 6 •S 571 IS (2) the predatory practices occurring within the 1 covered contract market. 2 Æ VerDate Sep 11 2014 23:17 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\S571.IS S571 kjohnson on DSK79L0C42 with BILLS