We are looking to sell our home and current neighbors have expressed an interest. We have not put it on the market yet.

I'm guessing that they are going to propose a lease purchase agreement. I'm trying to educate myself a bit before hiring an attorney (which we will do if they do indeed make this type of offer and I haven't found any non starters).

What I'm not sure about is if the up front money must go into escrow. It seems to me it is more or less a down payment, that is deducted if the deal closes and is forfeited if it doesn't.

I have the same question with the additional rent collected above market rent to go toward the purchase of the home. Now if the money were going towards closing costs, then I understand why it would need to be escrowed.

I see it as no need to escrow because if the deal closes it is a line item reduction, and if it doesn't then they don't get their money back anyway. Right?

I guess I'm trying to see if there is any other benefit for me the seller. My Mortgage, taxes and insurance are going to be pretty close to market rent. So I am not making any money on the "rent" part of the house.

Of course one in the hand is worth two in the bush...