Not a true arm’s length sale… - Posted by Michael Morrongiello
Posted by Michael Morrongiello on July 23, 2005 at 12:29:49:
While its certainly possible for you mom to sell her home (or anyone else for that matter)- an orchestrated sale from her to you with the lease back and buy back provision to her in reality is nothing more than an elaborate way to have her avoid doing a refinancing.
Thus the “paper” Debt obligation (the Deed of Trust & Note) that would be created between YOU to her would not be considered “squeaky clean” or created under a true arms length sale basis.
So, YES it can be done, but given that there was no money put down, it would make sense to probably start the Note balance at with a little lower LTV level than the $129K Note level you want to start at.
Since you will be the payor on the Note instrument, your credit profile, credit scores, employment, stabilty, etc. will all come into play along with the condition, upkeep, location, and value of the home.
We’ve participated in transactions like this in the past.
Remember if your mom stops paying rent to you for some reason in the future, YOU will still be obligated to make the payments on that Note.
Best to your success;