How should I handle current and future Lease Options with the SAFE ACT?

I’m new to this board but have been a reader for years. I currently have a property in Colorado that was my primary residence which I now have lease / Option buyers in. I also have one in Ohio which I am doing I guess what you would call a sandwich lease Purchase.

With the new SAFE ACT I’m a little worried about what is going to happen to these deals when it comes time to close. I have offered rent credits and also taken down payment option money on both of them.

Any feedback on how to handle this or future transactions?

Lease Options are not completed sales, there’s no problem to be concerned about.

Thanks for the reply. I have also read in a few other places though that within the lease option if you are giving rent credits or taking down payment / option money that constitutes and equitable interest in the property which HUD has included in the SAFE program.

And would you also say that the lease purchase is not a completed contract since both parties are required to perform vs a lease option.?

Scott, In no way am I an expert on the SAFE act. I suggest you seek an attorney. There are no downpayments on Lease Options, there is Option Consideration and yes equitable interest. From what I understand its not a sale. SAFE act is a concern of investors who wish to sell properties they don’t live in. It requires a Loan Originators license and documentation that resembles a conventional mortgage. An O/O can sell ones own home without the license. Maybe someone with more knowledge than I can help more. Herbster

Thanks again for the insight. That makes me feel good about my residence I’m selling but I will still have to find out about the sandwich lease purchase I have set up right now. I’ve contracted from the owner to purchase on a lease purchase, and have put a buyer in there on my own lease purchase. Since it is a lease purchase and not an option he put down payment money into it and not an option fee. I guess at the end I’m doing a double close anyway and he and I could just do a brand new contract at the end that looks more like a normal sale and change the final purchase price to reflect all the credits he has earned.

The HUD act says “any scheme or program” that facilitaes the transfer of title, it’s pretty clear that installment agreements, lease/options are considered as a plan to transfer title. Watch out for gurus, they will be full of ideas for a price. Maybe get some ideas and see your attorny!


What HUD Act (if there is one) are you talking about and what does it have to do with the provisions of the SAFE Act? Furthermore, A lease option is not an installment agreement. Don’t get your terms confused.


A lease purchase agreement as well as a lease option agreement have nothing to do with the SAFE Act unless you are planning to carry back the financing if and when the tenant/buyer exercises the option to purchase.

If the tenant/buyer obtains their own financing from a third party lender when the option is exercised, then your deal is not subject to the SAFE Act.

Just how I see it.