Can lender ask for tenants payment to buyer before close of escrow?

Asked by 563troy, 95117 Sun Jul 22, 2012

I am buying a rental property. Lender is asking for prof of payment of rent to buyer, although the escrow is not closed yet and technically the property still belongs to the current owner (seller). Is this normal? How should I interpret this? This will delay the escrow for couple of more weeks.

Help the community by answering this question:

+ web reference
Web reference:

Answers

4
Sam Shueh, , San Jose, CA
Thu Dec 25, 2014
That is correct. They want assurance that deposit and rent is recorded on the sellers bank statement ...
0 votes
Gregorio Den…, , San Diego, CA
Mon Jul 23, 2012
It's not out of the ordinary or unreasonable. They usually not only ask for it endorsed to you, but deposited into your account. Usually these are prior to funding (PTF) conditions so this is something that should take place after signing. If they have it as a prior to signing condition, then speak with your loan officer and have them see if it can get moved to PTF.
0 votes
Thank you....I'll speak with my loan officer. Thanks again.
Flag Mon Jul 23, 2012
563troy, Home Buyer, 95117
Mon Jul 23, 2012
Thank you. Actually it is not an owner occupied, but yes I am leveraging the rent (revenue) as part of my qualification towards the mortgage. However, since I have not technically purchased the property and therefore not the owner, how could I ask the existing tenants to make their checks payable to me. Or how could I change or amend the lease to declare myself as the leaser (owner). I have however shown prof of "rent insurance" for one year.

Basically, I felt that the lender's requirement to make the rent payable to me and change the contract to my name before the escrow is closed is un-reasonable. After all, the transaction is not concluded and at this point, I am simply a prospective buyer, not an owner yet.

Is this normal or is the lender buying time for themselves?
0 votes
Gregorio Den…, , San Diego, CA
Sun Jul 22, 2012
I assume you are saying that you are buying an investment property and you wish to use the rental income to qualify. It sounds like the lender is asking for for the signed lease agreement and the security and 1st months rent deposited into your account. this is pretty standard with owner occupied multi unit properties. For example, on a 2 unit FHA where you want to use the income from the second unit to qualify, you will need to show proof of the lease and monies deposited. Is this what you are doing?
0 votes
Thank you. Actually it is not an owner occupied, but yes I am leveraging the rent (revenue) as part of my qualification towards the mortgage. However, since I have not technically purchased the property and therefore not the owner, how could I ask the existing tenants to make their checks payable to me. Or how could I change or amend the lease to declare myself as the leaser (owner). I have however shown prof of "rent insurance" for one year.

Basically, I felt that the lender's requirement to make the rent payable to me and change the contract to my name before the escrow is closed is un-reasonable. After all, the transaction is not concluded and at this point, I am simply a prospective buyer, not an owner yet.

Is this normal or is the lender buying time for themselves?
Flag Mon Jul 23, 2012
Search Advice
Search
Ask our community a question

Email me when…

Learn more