Real Estate Investment News & Blog

How the Dodd-Frank Act Affects Real Estate Investors [VIDEO]


In this video, attorney Bill Bronchick explains how the Dodd-Frank Act applies to real estate investors.

  • If you are buying as an investor, it does not apply in any way.
  • If you are buying or selling on a lease option, it does not apply in any way.
  • If you are selling to an investor or to someone who will not live in the house, it does not apply in any way.
  • The only time Dodd-Frank applies is when you are selling a property to a buyer who will occupy the property as their primary residence.

Loading subscribe form...

About the Author...

William Bronchick, J.D. is a nationally-known attorney, author, and speaker. He has been practicing law and investing in real estate since 1990 and has been involved in over 2,000 real estate transactions.

Bill has served as President of the Colorado Association of Real Estate Investors since 1996. He is the author of many excellent real estate investing courses.

You can visit Bill Bronchick at his web site:


  1. Jim Ingersoll says:

    Nicely done.

    It is a game changer if you sell with seller financing. I think it will force more folks out of this exit strategy and back into being Landlords again. The regulations will be a pain to deal with if you plan to sell to owner occupieds with seller financing.


  2. William Bronchick says:

    It’s only a game changer for people who do a LOT of owner financing. For those who do a few deals a year, it will be a minor inconvenience.

    • Curt Smith says:

      I agree more with you William than others. I think my owner finance exit will see more demand!

      – use a licensed mortgage originator even if under 3 per year to be safe.
      – Get a letter from the LMLO saying your buyer is 43% DTI or better with full doc on debt and income
      – use a servicer
      – get a 3rd party appraisal for the property value
      – add to the closing package an affidavit that the borrower was truthful on income and affordability doc and assertions.
      – My personal tactic will be to put on the top of the security deed the name and license # of the LMLO used and the statement “Load originated following all Dodd Frank requirements”. To ward off the ambulance chassing lawyers.
      – choose buyers who are “good people and have a solid reason why they want to be in this property and loan” who will resist lawyers letters in the first 3 yrs of the mortgage to file suit against you.
      It’s in the relationship with your buyer and how you have treated them and of course following what was reasonable requirements all along for owner financing, just now it’s been codified.

      My views and practices,, Curt Smith, Sweetgum Properties

  3. Curt Smith says:

    BTW the comment re Lease Option, Dodd Frank does not apply is not true: Dodd Frank limits option duration to <= 3 years. The experts are saying rent credits are a form of financing so rent credits are out, now with DF in force this January.

    An aside is that the IRS treats option periods longer than 5 yrs as a form of sale and if audited your 10yr lease option you'll get hit with cap gains tax on that option that's longer than 5 yrs. I admit this is hear say so needs to be verified but I'm beliving this IRS view to be worth checking into. So long option periods to avoid an actual sale are now out and / or have side effects you don't want.

    • Bill Bronchick says:

      I am sure someone can ARGUE that a lease/option structured long term can be a “disguised loan”, but the simple 2-3 lease/opt that we investors do would clearly not be a sale.

      On another note, I am aware of no rule the IRS puts on lease/options being < 5 years to not be considered a sale. Do you have a Letter Ruling or Reg on that?

      Ditto for the Dodd Frank – do you have a reg citation for that or are you basing it on the IRS definition?


  4. carey usher says:

    Concerning the IRS, I was told just last year by our tax man that the IRS when filling out taxes for renters,
    They want verification that the land lords are actually reporting actual income on all their properties and
    if any are empty supposedly empty. As to make sure none are using cash paying renters to keep them
    from knowing the amount they are pulling. Plausible I might add. As some up until they began this a few years ago in Indiana. Many were falsely reporting their net earning and had defrauded the state. It’s a way
    to use unsuspecting renters as snoops. They don’t get any credit as they are led to believe. Anyone else know of this in the U.S. ? or is this just here in Indiana? just curious.

  5. Is there a cap on the interest rate charged on the fixed loan if under the 3 deal max rule? I have heard something about 6.5% over prime is a cap but I am not sure if that applies only if you are over the 3 deal rule or if that applies to all seller financing transactions provided to owner occupants. Lastly, is there any rules on the duration of the loan if under the 3 deal max? Once again, I heard something about the loan needing to be 30yr amortized but this may have been for loans outside of the 3 deal rule. Thanks in advance for any insight.

  6. Christine says:

    Thank you, William –
    Great presentation – you are clearly informed and generous to share of your knowledge and expertise. I’m also glad to see that you are in CO!
    Two questions:
    1. I understand that with D-F, we investors are now unable to use end buyers (whether another investor or owner/occupant) escrowed funds wired to title company for the “B-C’ closing to close the A-B (seller to us/investor) closing that happens first in a traditional Back2Back transaction. Instead, we are required to produce “wet funds” — no way to have a true “no cash/credit” deal anymore — True?

    2. You say that things get tricky when you sell to owner/occupant with seller financing under the D-F Act. What about when that owner-occupant end buyer secures their own financing?

    I look forward to your thoughts on these.

    Thank you kindly.



What do you think? We would love to hear your opinion.


Hide me
Let Us Help You Achieve Better Results. (IT's FREE!)
Name Email
Show me