Dodd-Frank Act & and Lease Option Rent Credits


#1

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.


#2

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.


#3

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.


#4

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?


#5

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.