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Beechville : Real Estate Advice

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Wed May 20, 2009
Jeffrey Bennett answered:
I'm assuming this is a "rent-to-own" contract where you're paying extra rent toward a downpayment, with the deed to be transferred upon closing (within a certain time period, say 2-3 years).

If you haven't written the contract yet, then yes it's possible to write it such that the deed transfers right away, though your coworker really has to trust you a lot! The usual rent-to-own case is one where the buyer isn't quite qualified, but expects to be able to get a loan or otherwise obtain funds within a reasonable time, and the seller is willing to wait -- while receiving rent and "extra" payments in the meantime. If the buyer fails to buy the house, the "extra" funds are forfeited.

If the deed transfers right away, essentially it's a regular puchase with seller financing; much riskier for the seller, who has to go through the long and probably unfamiliar process of foreclosure on you if you don't pay.

If you already have a contract:
"Signing over" a deed means transferring ownership. You can only do that by closing on the house, ideally according to the terms of the original contract. In other words, you can do this by buying the house a bit ahead of schedule.

If you're asking whether there's some way to "pretend" -- to sign the deed over without actually transferring ownership -- I don't think I'm going too far out on a legal limb when I suggest that would be fraud :-) If the deed transfers to you (with payment of transfer tax, etc.), you're the owner. So the seller has to be willing to do that. I suppose you could modify the sales contract to drop the price a bit or shorten the term, but it has to be "reasonable" (i.e., adjusting somewhat for market conditions, but not changing the sale price to $1).

Of course, I'm not an attorney and can't give specific legal advice! An attorney should be drafting and reviewing this contract for you -- preferably an experienced real estate attorney (i.e., not Uncle Bob the family lawyer). There are at least three major rent-to-own variants, each of which have pitfalls.

The bottom line is, in order to qualify for the credit, you have to *close* on a house before Dec. 1. Ownership must be conveyed to you such that you acquire durable property rights.

If you don't make it this year, I think it's quite likely the credit will be continued in some form next year. It got better from 2008 to 2009; maybe it will be $15,000 in 2010 :-) (Or there could be no credit, of course -- this is a political issue and therefore unpredictable in detail.)
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