Final Paper: Renting v. Buying

Renting v. Buying

RES 345: Legal Aspects of Real Estate

Rent vs. purchase of a home is a vast choice, and there are pros and cons to each option.

Finance is a significant issue that arises, whether renting or buying. Knowledge of your finances

influences how much cash you have left at the end of the month. It also impacts your lifestyle

and the amount of savings you accumulate over the years. Personal and emotional factors, which

are more intangible, also play a significant role in the rent versus buying option. When looking at

the many considerations for renting vs. buying a home, a strong case is applicable for either

choice. This paper will focus on the pros and cons of renting and buying a home, the financial

issues that may arise, the personal and emotional factors of the decision, and provide recommendations on how to resolve the problems.

Renting vs. Buying

There are many determining factors to help aid your decision on renting or buying a

home. Whether you are newly married, a middle-aged couple, or an elderly couple contemplating

a retirement community, it is a diversified and hard decision to decide whether to rent or buy a home. Is renting or buying a house better? Buying or renting is a matter that nearly all adults ask at some stage. In a News & World Report article, Geoff Williams, 2013, argues you should have a couple of inquiries to choose to rent or purchase. Is it essential, for example, that your house is

an investment? You may want to replenish your future housing arrangements if it is vital to

be an investment in your home. Houses can descend as readily as possible (think of liquidation).

Even if you believe that you only want to stay for five years in a house and want to sell for gain,

the majority of specialist recommends it is safer to rent. Another question one should consider is, can you handle the stress of buying a home? The economic aspects of purchasing

are weighed by most individuals, as they should because many individuals will make it the most

significant financial decision. A study conducted in 1970 lists many occurrences that take place

in the top 43 stressing situations of your lives is to purchase a house, according to Williams,

2013. Monetary government change (NO. 16), big mortgages or credit (NO. 20), changing

living circumstances (NO. 28), and residence change (NO. 32) are related. Stress overload can

lead to default, leading to the destruction of credit and even to home loss.

A pro and con to renting v. buying is maintenance. Per section 2.104 of the URLTA, landlords are responsible for the support of the rental property (Jennings, 2014). When renting a home, landlords are responsible for the upkeep of maintenance. Owning your home, you, as the homeowner, are responsible for all maintenance repairs and seasonal maintenance that can add up quickly. The consumer risks connected with renting due to future rents rises are of interest to people who choose to rent instead of owning ( Cheung, 2015). A home efficiently locks housing costs for the duration of your stay at a set rate and avoids uncertainty about future rent (Schulz, Wersing, & Werwatz, 2014). Landlords have the right to increase rent. If under a lease, the landlord can raise the rent at the end of your contract by offering a new lease with fresh rental and distinct terms, like an increase in rent. For most, renting and buying comes down to what one can afford at the moment.

The economic aspects of purchasing

are weighed by most individuals, as they should because many individuals will make it the most

significant financial decision. A study conducted in 1970 lists many occurrences that take place

in the top 43 stressing situations of your lives is to purchase a house, according to Williams,

2013. Monetary government change (NO. 16), big mortgages or credit (NO. 20), changing living circumstances (NO. 28), and residence change (NO. 32) are related. Purchasers tend to, make their judgment clouded by their emotions. Emotions can lead homebuyers to buyers’ remorse. First-time homebuyers want to buy the perfect home, but if buyers jump at the first or second home, at first, glance, it often results in buyer’s remorse. Overpaid payment and mobility to sell at an affordable cost is also associated with the emotions of purchasing a home. Infatuated customers that are anxious to acquire a property tend to ignore the importance of the process- from inspections to assessments. If a purchaser discovers the right home by chance, then sometimes the emotional attachment is high that the customer will overpay or expand financially. Stress overload can lead to default, leading to the destruction of credit and even to home loss. Therefore, if your life is in oscillation, it is better to rent and then purchase when your stress is less.

One of the most significant loan transactions a customer can carry out is a home mortgage. In the past, creditors tricked customers into mortgage payments. Some lenders rejected discrimination-based loans. The reality about mortgage loans, including the interest rate and closure expenses, was disguised by other lenders. The Federal Government has passed several essential mortgage loans legislation to solve a range of problems. The federal law is included in the Consumer Credit Protection Act. Since 1968, the act requires creditors to provide a percentage annual rate, funding fees, amount funded, total payment numbers, and full credit selling price. Consumers are also allowed to withdraw a loan three days before it is permanent. The 1975 Equal Credit Opportunity Act prohibits the discrimination of lenders

against customers. The law now says that lenders are not discriminatory based on race, color,

sex, faith, national origin, age, or government support (SFGATE, 2018). Not only with lenders, but federal legislation also protects against the violation of civil rights in housing. The Fair Housing Act states that a landlord can not reject a prospective tenant based on race, nationality, sex, family status, religion, or disability.

In renting, tenants typically have less authority and resources than property owners, and some states have particular legislation protecting the rights of tenants. While landlords own the property, tenants have the sole power of property, even if a valid lease agreement exists, against landowners. To prevent landlords from unlawfully entering a premise, the tenant’s right law was added. Section 3.103 of URLTA provides that only if a tenant consents and the purpose of coming is repair or service, landlords can enter the resident of a tenant, and in the case of an emergency, even without the agreement of the tenant. If the landlord must enter into a resident because of an emergency, the landlord must give the tenant at least two days’ notification and must arrive in a reasonable time manner (Jennings, 2014).

With everything that is going on in the world today, there must be a median to buying or

renting property in real estate, whether it is through arbitration, mediation, or if it comes down to it, filing an action in court. One recommendation to resolve issues with renting versus buying is if your life is in oscillation, it is better to rent and then purchase when your stress is less. As stated above, the upkeep of maintenance is a big issue. When thinking of purchasing a home, individuals should factor in the cost of repairs that may arise. Factoring in these costs also aid in the affordability of a purchase. Purchasers should examine the disclosure and have a home inspection conducted to understand possible red flags. As maintenance is an issue for homeowners, renters are worry-free from the repair or financial burden, but what do you do when you are a renter and your landlord refuses to repair a problem in a timely matter? In the case of Newkirk v. Scala, the case was about just that, refusal to repair. Jennings, 2014 produces facts and deliberation of the case. Lisa Newkirk (plaintiff) and her children leased a home from William Scala (defendant) from December 2003 to December 2004. Ms. Newkirk paid nine months in rent as well as a security deposit. Upon moving into the home, the Newkirks noticed a horrible stench coming from the tap water. The smell was so bad that it made the Newkirks nauseous. The contaminated water ruined the clothes washed in it, and it forced the Newkirks to bathe, launder clothes, and eat out elsewhere. At the request of Mr. Scala, the certified water specialist (Mr. Leighton) that did the water installment investigated the system and agreed with Ms. Newkirk. Mr. Leighton advised Mr. Scala that the problem could be corrected by replacing part of the treatment system. Despite the advice and after several failed pleas, Mr. Scala failed to correct the problem, the Newkirk’s moved in June 2004. Ms. Newkirk filed suit based on Mr. Scala’s breach of the warranty of habitability (Jennings, 2014). Ms. Newkirk was within her rights as a tenant to live in a habitable environment with her children and Mr. Scala, who also has the right to make it habitable, refuse to correct the problem.

While renting or buying a home is a major decision in one’s life, the pros and cons, financial issues, and personal and emotional factors play a significant part in the process.

References

Cheung, C. S., & Miu, P. (2015). Home ownership decision in personal finance: Some empirical evidence. Financial Services Review, 24(1), 51-76. Retrieved from https://search-proquest-com.proxy-library.ashford.edu/docview/1680949398?accountid=32521

Jennings, M. (2014). Real estate law (11th ed.). Retrieved from https://vitalsource.com

Schulz, R., Wersing, M., & Werwatz, A. (2014). Renting versus owning and the role of Human Capital: Evidence from Germany. Journal of Real Estate Finance and Economics. 48(4): 754-88, Database: EconLit with Full Text

SFGATE (2018). Federal Mortgage Lending Laws. Retrieved from

https://homeguides.sfgate.com/federal-mortgage-lending-laws-7622.html

Williams, G. (203). Renting vs. Buying a Home: Which is Smarter? News & World

Report; Washington. Retrieved from https://search-proquest-com.proxy

library.ashford.edu/docview/1492137377/8F1239E077D245CEpQ/4?accountid=32521