buying a house way below market/ like a loan to someone

[Ryan Wolfe]

Hello, this is my first time posting on here I am in Canada and have followed this site for years. I have slowly been getting my legs under me and now I have an interesting opportunity in front of me. I know someone who needs money and they also want to get their name of the title of there property as they are worried the government may try to seize it as they are in a long legal battle with. (nothing bad but it has been a trying time and taken years due to covid.) They need money to go back to court, but don't want to lose the house or move. so they are proposing I buy the house at a very low rate and it would be all under my name and they would rent off my. I do the buy and hold strategy so this seems like a win win for me as they are telling me the property is worth around 1.2 and they are hoping for 300- 500 and eventually they will buy the place back off me for that amount or a little more while they pay rent. I am posting here as I am trying to find any laws or downsides to this. Because after my number the property has a great CoC% so if I where to just buy a house like this it would be fine. My questions are has anyone had a similar thing happen where a family or friend sold them there house as like a loan for a few years and just paid rent and how did that go? 2. Is there any legal way the courts could come after me for buying the house at such a cheap rate?

3. Is there anything else I should be watching out for.

Thank you to anyone who gives this a read and I will appreciate any wisdom 

[Stevo Sun]

Quote from @Ryan Wolfe:

Hello, this is my first time posting on here I am in Canada and have followed this site for years. I have slowly been getting my legs under me and now I have an interesting opportunity in front of me. I know someone who needs money and they also want to get their name of the title of there property as they are worried the government may try to seize it as they are in a long legal battle with. (nothing bad but it has been a trying time and taken years due to covid.) They need money to go back to court, but don't want to lose the house or move. so they are proposing I buy the house at a very low rate and it would be all under my name and they would rent off my. I do the buy and hold strategy so this seems like a win win for me as they are telling me the property is worth around 1.2 and they are hoping for 300- 500 and eventually they will buy the place back off me for that amount or a little more while they pay rent. I am posting here as I am trying to find any laws or downsides to this. Because after my number the property has a great CoC% so if I where to just buy a house like this it would be fine. My questions are has anyone had a similar thing happen where a family or friend sold them there house as like a loan for a few years and just paid rent and how did that go? 2. Is there any legal way the courts could come after me for buying the house at such a cheap rate?

3. Is there anything else I should be watching out for.

Thank you to anyone who gives this a read and I will appreciate any wisdom 

 I would do proper due diligence on that title. If they are fighting with the government there is a chance there is already a lien on the property. I have seen properties that were way below market price but a little more research showed the CRA already had massive liens on the property. 

I think the other risk is if they owe money to the CRA (assuming this is a tax thing) amd they sell under market. The CRA could potentially deem the sell to be non arm's length. Then they might have more issues with the CRA. They might come after them for deemed sale at fair value and they would likely owe a lot of tax (assuming the current value is higher than than what they bought for).

When my mom sold me their house it was dome at fair value (aka. market price) so we avoided all those potential issues. 

Last thing is I would be careful, maybe its just me being skeptical, but this sounds like a scam to me. Why would it be a win for the home owners? If this is all legit then they are trusting you with like 800k of equity and they pay rent while you hold their equity? This doesn't make sense to me.  If they simply trust you that much I think it would probably be fair to say its a non arm's length transaction. All sounds a bit sketchy. Do proper due diligence and best of luck!