Posted On 23 Oct 2018
Any credit that is given by a seller from payments that reduce the sale price is a financing agreement. Any financing agreement of any kind from a seller to an owner occupied buyer for a residence falls under Dodd-Frank, forget NY, that’s federal law. There are exemptions, such as you living in the property when selling your own home.
There may be exemptions for dealers, as to the number of transactions in some states, but my question would be, how do you prove you met that exemption if you have a number of properties, since a lease-option does not require any filing, it can be a “hip-pocket” deal.
I’d suggest before you try it, to get competent legal advice, and that does not come in forum posts, blogs, podcasts, or any other media other than from the mouth of your legal counsel or in writing as an opinion.
Rent credits have always had financing issues when it came time for a buyer to obtain a loan, which is the reason most deals fail with investor sellers. What you might credit a buyer with is not necessarily what lender will credit them with and then they are short on the down payment they thought they established.
Start giving too much in credits, you have a disguised sale issue, you may not be evicting a tenant buyer but foreclosing on their interests. You can also have tax issues and the ever loved due on sale issue that you can’t avoid. Can you pay off a loan and continue selling as agreed? Most can’t. Now, you have other legal matters with your buyer!
Lease options can be accomplished, just don’t give rent credits to the purchase price, then you don’t have the financing issues. Good luck……and read some more! 🙂