Legal Question in Real Estate Law in Virginia

Should I add my renters name onto an escrow account that I am holding for a "Rent to Purchase Agreement?
I have a "Rent to Purchase" property that I have been adding $200 per month into an escrow account for the renters down payment for the past few years to be used when they were ready to purchase. Their 1st attempt of obtaining a mortgage fell through because their income did not meet the requirements. Now their new mortgage agent says that I need to add their name to the escrow account because I haven't been charging them "Fair Market Rent" according to FHA for the past few years and that FHA will not count the full amount that is in there (about $15,000) as his down payment. I thought $1100 rent plus the $200 down payment was reasonable rent since part of the agreement was that they took care of all maintenance and repairs. I can see where if things fall through for them again that this could open a Pandora's Box. Would they be able to start a lawsuit claiming that all or part of the escrow is "their" money?? Should I even consider putting their names on the account? If I don't it is most likely that they will not obtain financing again.

Asked on 6/26/17, 7:44 am

Michael Hendrickson Law Office Michael E. Hendrickson

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Yes, I believe that the mortgage agent is correct in asserting that these renters(would be buyers) will

need to have their names added to this escrow account in order to secure approval of an

FHA backed mortgage and to comply with the agency's eligibility rules.

Answered on 6/28/17, 7:52 am

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