If first time home buyer rents out house withinthe 3year limitations period and does not live in house as their primary residence, what are the penalties?

Asked on August 25, 2011 Louisiana


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

My understanding of your question is that it is based upon the loan used to assist in the property's acquisition by the home buyer. Most loans have a lower rate of interest if the actual buyer will be living in the home as opposed to a tenant.

Consequently most loan documents have provisions that the person buying the property agrees that he or she will be living in the property being acquired for a certain period of time after close of escrow. If there is such a provision in the loan that was obtained and the property owner does not live in the house as his or her primary residence, the lending institution could deem the loan in material breach and call it due and payable.

Good question.

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