A real estate firm that operated a rent-to-own home-selling business is trying for an image makeover after regulators in New York and Pennsylvania accused it of engaging in predatory sales practices.

The firm, Vision Property Management, cleared one hurdle to its operational overhaul on Friday by reaching a tentative settlement with the New York attorney general and the New York Department of Financial Services.

The agreement, which requires approval by a federal judge, would require Vision to provide $600,000 in cash restitution and clean titles to renters and their families who are currently living in 58 homes that the firm owns in New York. Atalaya Capital Management, a hedge fund that had provided financing to Vision, previously agreed to pay New York regulators $2.77 million in restitution for consumers.

The settlement also prevents any businesses in which Vision’s executives take a controlling interest from engaging in any residential real estate business in New York.

Linda A. Lacewell, the superintendent of the Department of Financial Services, said the agreement “provides a measure of restitution to New Yorkers who were victimized by Vision’s predatory practices.”

Vision did not respond to requests for comment.

Officials in New York had accused the company of marketing run-down homes to tenants, using deceptive lease agreements that required them to make all repairs. The leases promised renters the chance to buy their homes after seven years, but renters often ended up being evicted or abandoning the homes after making thousands of dollars in repairs.

The settlement is one step toward allowing Vision to revamp itself into a more traditional home-rental business by effectively merging with another company, FTE Networks. Just before Christmas, Vision agreed to sell its 3,000 homes to FTE in a deal the parties valued at $350 million. Vision’s executives will join the company under the planned merger, according to a regulatory filing.

But FTE Networks has had its own troubles. Just days before the sale was announced, the NYSE American exchange suspended trading in FTE shares and moved to delist its stock after finding the company had engaged in operations that were “contrary to the public interest.” And the broker who introduced Vision and FTE to each other was recently charged with fraud by securities regulators.

FTE said in a statement that it was “confident that all ongoing litigation” with Vision would be resolved by March 30. The company said it was appealing the stock exchange’s move to delist its shares.

Housing advocates have pointed to firms like Vision in cautioning home buyers to be wary of rent-to-own deals involving fixer-upper homes. Rent-to-own deals have grown in popularity in lower-income neighborhoods where it is hard for borrowers to get so-called small-dollar mortgages for homes worth less than $100,000.

Vision has faced similar lawsuits charging it with engaging in predatory sales practices in Wisconsin, Ohio and New Jersey. Two years ago, Fannie Mae stopped selling foreclosed homes to Vision and other firms like it because of complaints about the rent-to-own business model.

And in Pennsylvania, where Vision owned about 600 homes, Attorney General Josh Shapiro is not rushing to embrace the company’s reorganization. His office filed a motion for preliminary injunction last month to block the sale until it could make sure that residents living in those homes were not harmed by the sale. A state judge in Pennsylvania has set a hearing on the motion for next week.

“While I am glad to see that Vision Properties is committing publicly to no longer engage in these ‘rent to own’ contracts, I will not stop in seeking justice for what they did in Pennsylvania,” Mr. Shapiro said in a statement. “This company targeted low-income and minority communities, promising a dream of homeownership and delivering only dilapidated and unlivable residences.”

The deal to sell Vision’s homes also has a curious origin. It was brokered in part by Suneet Singal, who ran several real estate investment trusts and is now dealing with his own regulatory issues. On Dec. 16, four days before Vision and FTE announced their deal, the Securities and Exchange Commission filed a complaint charging Mr. Singal with defrauding investors in some of the companies he ran.

Mr. Singal, who controls 22 percent of FTE’s shares, said he “will prevail” in the litigation with the S.E.C.

FTE said in its statement that it was not aware of the S.E.C. investigation at the time of the deal.

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