Cress Trust owns houses in Marion County, for whom Rainbow Realty Group, Inc., sells, rents, and manages. The same person serves as Rainbow’s president and Cress’s corporate trustee. Cress offers four options to potential customers: a straight sale, straight rental, land contract, or a rent-to-buy contract.
On May 3, 2013, Katrina Carter and Quentin Linter, a married couple living in Marion County, signed a purported Rent to Buy Agreement with Rainbow for a single-family house in Indianapolis.
Under the Agreement, the Couple agreed that they would acquire the House “as is,” that it was not in a livable condition, and that they would need to make it habitable. The Agreement also stipulated that the Couple would have to pay for repairs, and any improvements to the House would become part of the property.
The Couple also had to make “rental payments to the Landlord that are equal to the [principal, interest, taxes, and insurance]” every month for 30 years. The Agreement allowed the Rainbow to evict the Couple if they fell behind on payments. Despite the 30-year payment term, the contract stated that if the Couple made the first 24 payments, the parties would execute a separate “Conditional Sales Contract” for the remaining 28 years.
The house was missing toilets, plumbing, electrical wiring, and door locks when the Couple signed the agreement. All the windows were broken. Even though Rainbow and Cress agreed to make electrical and plumbing repairs in a separate contract, the work was not finished two years later.
The Couple fell behind on their payments. Rainbow tried to evict them twice but agreed to postpone eviction in exchange for higher payments.
Eventually, Rainbow filed a third eviction suit, and the Couple counterclaimed, contending that Rainbow had failed to meet landlord obligations, among other counterclaims. At issue, relevant to this chapter, was whether the Agreement was a residential lease. If it were a land-sales contract, landlord-tenant protections would not apply.
1. Was the Rent-to-Buy Agreement a land-sales contract?
2. If not, was it a residential lease?