Cash back for purchase

[MikeMcCrae]

According to CMHC if the rent to own contract does not contain the wording that the deposit and all additional monies paid are refundable they will not consider the deal as a true rent to own. And they also want you to prove that the money was held in trust for the purchaser. This would be accomplished by having the deposit and all the additional "rent" money kept in a separate account so that it can be verified at time of title transfer and new mortgage.

 

[kboughen]

QUOTE (MarkTorgerson @ Oct 27 2009, 10:30 PM) And I am still curious on any comments on those interest free loans being offered for lease to own properties???
In my experience with using R2O credits as down payments, the Lenders want to see the following;

• The authorized R2O agreement confirming the details of the R20 agreement including upfront credits, monthly credits, commencement date, completion date, purchase price and authorization date
• Verification that the upfront credit was actually paid by the Tenant and received by the Owner/SellerVerification that the monthly credits were above market rent, and were paid by the Tenant and received by the Owner/Seller

The above process prohibits a typical Seller and Buyer from "manufacturing" a down payment with an inflated purchase price through the guise of a R20 agreement as contemplated earlier in this thread.

 

[MarkTorgerson]

QUOTE (kboughen @ Nov 7 2009, 08:55 AM) In my experience with using R2O credits as down payments, the Lenders want to see the following;

• The authorized R2O agreement confirming the details of the R20 agreement including upfront credits, monthly credits, commencement date, completion date, purchase price and authorization date
• Verification that the upfront credit was actually paid by the Tenant and received by the Owner/SellerVerification that the monthly credits were above market rent, and were paid by the Tenant and received by the Owner/Seller

The above process prohibits a typical Seller and Buyer from "manufacturing" a down payment with an inflated purchase price through the guise of a R20 agreement as contemplated earlier in this thread.


This "manufacturing" of a down payment is going on out there much more than I thought. I have followed up on some advertising I have seen to help educate myself. I have had communication with 3 different sellers now that are offering me a 1 year RTO with 100% of my rent to go to my down payment. These have all been builders that are sitting on new homes (condos) that are not selling. Is there no governing body with these type of sales??