Dodd-Frank Act & and Lease Option Rent Credits


Is it true that giving rent credit to a seller might be in violation of Dodd-Frank? I was watching a Lease Option video and the presenter indicated rent credits shouldno longer be given to sellers.


Perhaps what they meant was if seller is crediting part of lease money to the purchase price then that could be considered a seller financed deal and Dodd /Frank could apply.


Not exactly true - a lease/option is not a sale, and thus is not a loan that is under Dodd Frank regs. Now, is it possible that giving heavy rent credits and having a long lease/option that LOOKS like a sale and is thus under Dodd Frank? Sure, but a typical 2-3 year lease/option with a little rent credit isn’t going to change it from a lease/option into a loan.


William, could a lease option fee be construed to look like a sale or is it pretty safe to collect lease option fees of 3-5% of the sales price?


The down payment isn’t the issue. It’s the length of the lease, the amount of the credits, the amount of work done on the house, etc. If it looks like a duck, and it quacks like a duck, well - you know the rest.