Does anyone out there know if there are limitations on a lease option to purchase of the difference of rent above fair rental value that can be credit to buyer when exercising the option to purchase i.e. 3% ??

Thanks,

Louis,

If I understand your question correctly, you are asking if their is a limit, e.g.3%, that a seller can credit a buyer towards closing, if the credit is from amounts paid to the seller by the buyer and these amounts paid to the seller by the buyer exceed the fair market rent as part of a lease-purchase agreement.

I don't think there is a limit. The amount paid by the buyer above the fair market rent are funds the buyer is paying the seller for the property. There is no limitation on how much the buyer can pay the seller. Theoretically the buyer could give the seller 40% of the sales price prior to closing as long as it was properly documented and borrow the remaining 60% and the LTV would be 60% as long as the property appraised for the sales price.

Funds that the buyer pays the seller prior to closing that are properly documented should not be included in the limitations on seller contributions as these funds are not being contributed by the seller but by the buyer.

Thanks Harlan.  Your assumptions are correct, and that is what my initial thoughts were.  It appears the proof will be in the lease agreement, appraisal with fair market rents, and of course the documentation of the rents received.

Louis