Vendor Take Back Mortgages/Rent to Own - What You Need to Know

(April 20, 2020 )

Seller financing, also sometimes known as a vendor take-back mortgage, is a type of mortgage in which the seller lends funds to the buyer to facilitate the purchase of a property. “Rent to own” agreements fall into this category.

Seller financing is an acceptable alternative to securing financing through a traditional lender, however, when entering a deal that involves seller financing, we urge consumers to be vigilant, and understand exactly what they’re getting into.”

  • Hire your own licensed real estate brokerage: a licensed Realtor must act only in your best interests

  • Talk to a lawyer: have your own lawyer review the contract to ensure the agreement is legal. 

  • Verify the property title: it is always good to know exactly who owns the property and what is registered on title, particularly a mortgage. 

  • Ensure the contract is complete: read the contract to ensure it specifies who will make mortgage payments, to whom, and if applicable, that any lender on title is aware of and approves this seller financing arrangement.

Watch your RISK - Find out more about mortgage fraud in general with RECA's Mortgage Fraud Awareness and Prevention resources.

Information collected from The Real Estate Council of Alberta (RECA)

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