The Corporation is empowered to purchase or build, as well as incur debt to achieve same, residences which the Corporation would own and lease under the Program established herein.

(a) The lease-to-own contract shall contain:

(1) a lease of the residence, or in the case of cooperative housing units a sublease, for a term not to exceed five (5) years;

(2) provision for a rental payment not less than
the sum of:

(A an amount sufficient to pay the estimated property taxes and insurance on the residence, or in the case of a cooperative unit, the maintenance charges;

(B) the cost of routine maintenance of the residence, unless the lease-to-own contract requires the Tenant-Purchaser to perform such maintenance at his own expense;
(C) an amount sufficient to pay interest on the mortgage loan held by the Corporation on the residence, less the estimated earnings on the escrow fund provided in § 4708 of this Act which is allocable to such mortgage held by the Corporation;

(D) an amount to be held in escrow, referred to as the “”Tenant-Purchaser escrow,”” which, when accumulated over the period of the lease-to-own contract or no more than five (5) years, will amount to a sum sufficient to pay the Tenant- Purchaser’s required down payment under the lease-to-own contract, plus the estimated closing costs of purchase which will be allocable to the Tenant-Purchaser, including the seller’s closing cost at the initial closing of the mortgage to the seller; and

(E) in the case of a condominium unit, common charges;

(3) provisions obligating the Tenant-Purchaser to buy and the seller to sell the residence at the end of the lease term, which shall not exceed five (5) years;

(A) if Tenant Purchaser seeks to utilize any HUD grants for down payment and closing cost assistance, then Tenant Purchaser shall exercise the purchase option on or before three (3) years;

(4) a provision that the default by the Tenant- Purchaser under the provision of the lease-to-own contract shall result in the forfeiture to the seller of all amount in the Tenant-Purchaser escrow; furthermore, the various escrow funds funded under the Program should be residence specific, such that a default or other failure of the tenant to purchase the unit within the five (5) years allowed would result in the escrow being forfeited to the successor Tenant-Purchaser, and not the Corporation;

(5) a provision that the Tenant-Purchaser shall have the option upon reasonable notice to the seller and the Corporation to elect to close the purchase of the residence not earlier than one (1) year from the date of execution of the lease-to-own contract;

(6) a provision that the rent shall be adjusted under the lease-to-own contract periodically to take account of changes in taxes, insurance, escrow earning, mortgage interest and other variables intended to be covered by the tenant’s rental payments; and

(7) a provision governing the consequences of default by each of the parties.

(b) The provisions of this Act shall not apply to the tenancy of the Tenant-Purchaser under the lease-to-own contract from and after the purchase by the Corporation of the mortgage loan on the residence so long as the Corporation holds the mortgage loan. The Corporation shall not sell the mortgage loan prior to the closing of the transfer of title to the Tenant-Purchaser or default by the Tenant-Purchaser under the lease-to-own contract.

(c) The Corporation shall adopt procedures to ensure that the payments contemplated by § 4707(a)(2) of this Section are in fact applied to those purposes.

2015 NOTE: Subsection designations in (a)(2) and (3) were altered to adhere to the Compiler’s alpha-numeric scheme pursuant to the authority granted by 1 Guam Code Ann. § 1606.