Guam § 4907 - Lease-to-Own Contract.

§ 4907. Lease-to-Own Contract.

The Corporation is empowered to purchase or build, as well

as incur debt to achieve same, residences which the Corporation

would own and lease under the Program established herein.

(a) The lease-to-own contract shall contain:

(1) a lease of the residence, or in the case of

cooperative housing units a sublease, for a term not to

exceed five (5) years;

(2) provision for a rental payment not less than

the sum of:

(A an amount sufficient to pay the estimated

property taxes and insurance on the residence, or

in the case of a cooperative unit, the maintenance

charges;

(B) the cost of routine maintenance of the

residence, unless the lease-to-own contract

requires the Tenant-Purchaser to perform such

maintenance at his own expense;

COL9/7/2021

(C) an amount sufficient to pay interest on

the mortgage loan held by the Corporation on the

residence, less the estimated earnings on the

escrow fund provided in § 4708 of this Act which

is allocable to such mortgage held by the

Corporation;

(D) an amount to be held in escrow, referred

to as the “Tenant-Purchaser escrow,” which, when

accumulated over the period of the lease-to-own

contract or no more than five (5) years, will

amount to a sum sufficient to pay the Tenant-

Purchaser’s required down payment under the

lease-to-own contract, plus the estimated closing

costs of purchase which will be allocable to the

Tenant-Purchaser, including the seller’s closing

cost at the initial closing of the mortgage to the

seller; and

(E) in the case of a condominium unit,

common charges;

(3) provisions obligating the Tenant-Purchaser to

buy and the seller to sell the residence at the end of the

lease term, which shall not exceed five (5) years;

(A) if Tenant Purchaser seeks to utilize any

HUD grants for down payment and closing cost

assistance, then Tenant Purchaser shall exercise

the purchase option on or before three (3) years;

(4) a provision that the default by the Tenant-

Purchaser under the provision of the lease-to-own

contract shall result in the forfeiture to the seller of all

amount in the Tenant-Purchaser escrow; furthermore,

the various escrow funds funded under the Program

should be residence specific, such that a default or

other failure of the tenant to purchase the unit within

the five (5) years allowed would result in the escrow

being forfeited to the successor Tenant-Purchaser, and

not the Corporation;

COL9/7/2021

(5) a provision that the Tenant-Purchaser shall

have the option upon reasonable notice to the seller and

the Corporation to elect to close the purchase of the

residence not earlier than one (1) year from the date of

execution of the lease-to-own contract;

(6) a provision that the rent shall be adjusted

under the lease-to-own contract periodically to take

account of changes in taxes, insurance, escrow earning,

mortgage interest and other variables intended to be

covered by the tenant’s rental payments; and

(7) a provision governing the consequences of

default by each of the parties.

(b) The provisions of this Act shall not apply to the

tenancy of the Tenant-Purchaser under the lease-to-own

contract from and after the purchase by the Corporation of

the mortgage loan on the residence so long as the

Corporation holds the mortgage loan. The Corporation

shall not sell the mortgage loan prior to the closing of the

transfer of title to the Tenant-Purchaser or default by the

Tenant-Purchaser under the lease-to-own contract.

(c) The Corporation shall adopt procedures to ensure

that the payments contemplated by § 4707(a)(2) of this

Section are in fact applied to those purposes.

2015 NOTE: Subsection designations in (a)(2) and (3) were altered to

adhere to the Compiler’s alpha-numeric scheme pursuant to the authority

granted by 1 GCA § 1606.