Doing a Rent to own deal for a client, how should I handle the down payment

4 Replies

Right now a friend has asked me to try and find a renter with an option to buy for her house. she wants 2.5% down and we've agreed that she'll give me 0.5% of that down payment for my effort. 

What would be the recommended way of receiving that down payment? Providing I'm doing all the leg work of showing the house, Should I ask the potential tenant for two checks one in the owner/sellers name with the 2% amount and another check in mine with .5% amount

or should I ask for a check with the whole amount to go to me and then pay the owner/seller later

In a lease option agreement there is an option fee and there is monthly rent.  If this is really a owner financed sale then there is a down payment.  Unless you are licensed you cannot receive payment for a sale.  Each state can be different concerning what you can do without the license.

Good Luck.


You simply take your commission as provided in your listing agreement with the seller.

I am assuming you are not licenced in VA.

And you said that your friend wanted you to help find tenant buyer for your friends property.

If you want to be legal and help your friend, do this way.

One, act as a principal in a transaction and get a letter of intent from your friend that says that you have act as principal in a transaction, your friend understands that there is risk in the transaction, and you will sell your interests in a lease with an option agreement to a buyer.

If you don't act as a principal in transaction, and do a favor for someone, your acting as a licensed agent, and it's illegal. You could have major problems with the law.

Also, realize that as of January 10, 2014, the laws have changed with seller financing, which includes lease options. The sellers liable for up to three years payments and court costs and legal fees and down payment if the tenant buyer gets a lawyer and sues the seller. A way around this is to use an RMLO to "underwrite the tenant buyer" as per the "ability to repay rule" from the Dodd Frank act. What I do is have my RMLO prepare the necessary documents and give their blessing on the transaction. I know this is overkill and everybody says that you do not need to do this, but I don't want a lawsuit down the road.

Every state is different, and every Department of Real Estate views lease option assignments differently. You live in Virginia and if you only do one of these you probably not to get under the guise of the Department Real Estate in Virginia.

Here's a link for my letter of intent with the seller to assign a lease option agreement for a fee.

Good luck!

Thanks for the input everyone, and thanks Gibbons for the letter of intent example

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