Re: rental policy in these economic times
From: Diana Carroll (
Date: Wed, 2 Feb 2011 08:32:41 -0800 (PST)
This is interesting, Kristin.

Who is the "we" that is doing the leasing?  That is, what entity owns the unit?

In our case, at Mosaic Commons, our unsold units are owned by a
corporation (LLC) we formed in order to develop the units.  In theory,
the LLC could lease-to-own, but in reality not so, due to our
construction loan.  Our lender requires that they be paid out of funds
from the closing, and will not permit the units to be rented because
it would delay the sale, thereby delaying them getting paid for that

Did you have construction financing?  If so, where does the lender
stand on this practice of lease to own?

- Diana

On Wed, Feb 2, 2011 at 10:59 AM, Kristin Wells <cbuilderdd [at]> 
> Sure. I just sent this to someone who emailed me offline too. It's pretty
> common in condos and such (especially now) and we are following some
> standards, but are more lenient/giving in some respects - so we're told.
> To move in, someone puts down an option fee. This is typically
> non-refundable and varies in amount. However, it is put in a restricted
> account for the purpose of their future down-payment and will be made
> available to the purchaser upon closing. We are doing 2.5% (which for a 300K
> average unit cost is $7500).
> Then each month the person makes payments (similar to rent or mortgage). A
> percentage of each payment is also put into this restricted account. So they
> are building up equity for their down payment. We are doing 4% of purchase
> price divided among the 12 months as the monthly payment. 25% of that is
> reserved for the purchaser. The rest is used by the developer to help offset
> holding costs (or in other cases, could be the home-owner for mortgage,
> repairs, etc. - also holding costs). For us, the lessee is also responsible
> for the HOA dues, utilities and property taxes while living here. We are
> told that 25% is high, but we really want people to buy, so having a good
> nest-egg was important to us. These funds are also held in a restricted
> account (likely the same as the option fee)
> Our term is one year with possibility for an extension. This too can vary.
> They can execute the purchase anytime within that time-frame.
> The total monthly costs when everything is accounted for is a bit higher
> than average rent around here, but less than most who would have a mortgage
> with 20% down. And, they are putting money away for their down payment. If
> they walk away/don't close, then the owner gets the option fee and the
> monthly deposits. So its a pretty strong incentive to buy in. And it helps
> bridge the gap for people who aren't quite in a position to buy yet.
> Obviously all the terms could be whatever you wanted them to be.
> Hope this helps!
> On Wed, Feb 2, 2011 at 7:55 AM, Sharon Villines
> <sharon [at]>wrote:
>> On 2 Feb 2011, at 12:27 AM, Kristin Wells wrote:
>> > We did just start a
>> > lease-to-own program.
>> Can you give us the details? Generally, these require that the owner be
>> able to forgo the capital that is invested in the unit until ownership is
>> transferred. How are you handling that?
>> Sharon
>> ----
>> Sharon Villines
>> "Let us make a special effort to stop communicating with each other, so we
>> can have some conversation." Judith Martin
>> _________________________________________________________________
>> Cohousing-L mailing list -- Unsubscribe, archives and other info at:
> --
> Kristin Wells
> Daybreak Cohousing, LLC
> 503.754.6776
> Kristin [at]
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