On my VBRO rentals I always ask for a copy of the rental contract/lease prior to making any financial commitment.

Many will take a deposit via paypal and balance by cash or equivalent upon arrival, inspection of the unit and signatures on the agreement.

For the legal minds: how do we know that the person we are paying money to is the legitimate owner or legal agent of the owner?

In Toronto someone managed to get his hands on a set of keys to an empty apartment near the university. They posted for rent ads in Craiglist and Kijiji just before school started in end of Aug and collected first and last month's rent from six different individuals in cash before disappearing. His bait was no need for guarantor and eight/nine month lease for only the school year.