I am buying my (3) sister's interest in mom's former home. (I have 25% interest also).
When I received the formal rent to own proposal, it included interest......to my surprise.
According to my sisters, the attorney handling the paperwork said that since this is a real estate transaction, there has to be some form of interest showing, to reduced the risk of their being audited.
Is this true, or am I being duped?
Thanks very much for your time and advice!
Swa

Even though you're buying from your Siblings . . . . there's a Third Party in the Room.

You should have your own Attorney just to audit these proceedings. Once this transaction is completed, you'll be owning it ALONE!

It's not necessarily a show of distrust . . . . just doing your own due diligence.

"Trust; but verify" seems to have a lot of applicability in Real Estate these days.

How old is this house? Is it free of lead paint, asbestos, mold, and all of those other elements and substances that create havoc for Home Owners for decades after they make such a purchase? A good Conveyance Attorney can give you (for a Fee) the necessary assurances that you're not going to have regrets in making this purchase years from now . . . . and keep your relationships with the Siblings on an even keel.

interest on what? Is there a loan?

who hired the attorney and who is the attorney representing?

Without knowing hardly anything, it sounds like this isn't a "rent to own" (lease purchase) agreement. Sounds more like an owner carry. Your sisters are the bank. Your 1/4-interest is your down payment. So essentially your monthly payment amortizes the "loan" from your sisters. In that case, interest would be a part of the deal.

How was a price for the home established?

I AGREE fully - you MUST have your own attorney.

My brother bought out my second brother and I on our inherited father's house. We drew up our own little sales contract, but, he was also getting it financed.

Get an attorney to look over your sisters' attorney's documents BEFORE you sign. A real estate attorney, not some guy who does wills, criminal cases, divorces - get a real estate attorney.

A little more background on the home: It is 134 years old, but has been inspected and found to be free of all chemical/environmental hazards.
Mom is still alive. She simply wants to give us the proceeds from the house because she is comfortable with her savings and SS income.
I view the situation as this: my sisters are not LOANING me any money.....they are simply getting there living inheritance in instalments rather than a lump sum.
The attorney is hired and paid for by my mother, because she often uses him to update her will and deed to the house.

Due's Question above is still important:
I think a Mortgage from an independent lending institution would be more conducive to future family harmony; but we're probably too late for that in this instance.

PS: Where's the Mother going to live after the transfer of Ownership ?

I'm not sure if I understand the entire situation here, but I see no need for a loan, provided that you can cash out your siblings by the specified time in the future. I assume this is the purpose of the rent to own agreement. so, there is no need for any interest to be charged. you need to speak to your mother and the attorney for clarification. It would be to your advantage to consult your own attorney to review the contract and help work out an agreement that is amenable to everyone.

Too late-- you're probably right. Sounds way too complicated with Mother still owning the property but sisters being "bought out". Unless Mother qc'd the property to all four sisters. That's possible, but we don't know.

I am not an estate planning specialist, but this sounds very odd. ask the lawyer to give you some legal references or IRS guidelines to support his claim.

like real estate agents, lawyers have a duty of competency and disclosure to their clients. he can't just make up some concept that has no basis in established law.