He buys and then HUD ends up cancelling the sale because of some unknown to me issue.  

You are responsible to the town and they will enforce all kinds of hidden and unknown issues.

Its the unknown, that scares me.

This means we have eliminated any Wholesaling from us, and our buyers don't need to use Wholesalers with unknowns.  

The funds have deeper pockets, but i am not sure how long some will continue to operate in an industry where there are so many unknowns and where property management plays such a key role in the success.We'll see -

Basically did away with unknown to him.

It could be only a matter of time before regulators begin answering rent to own ads....These co-op L/Os are nothing more than a pass-through transaction and you may have a problem giving an option of a property you don't own or have title to, which is the reason the option should be sold and assigned.The reasons I have not written any material on the subject is, compliance issues in all states, my time and other minor factors, but I don't see anyway in the near future to provide information that will be compliant into an unknown future or with current restrictions state by state.

If you plan for the majority of the unknown when making your offer, you should get it at a price that leaves little room for regret. 

It is a bit of an unknown and can be a little scary.  

The truth is I am just afraid of the unknown.