If there is no written contract, there is no enforceable contract in most states (statutes of frauds). If the seller honors its verbal agreement to credit the applicant with past rent payments, it's still going to be a loan to finance the acquisition of the property, which will make it exempt from rescission rules.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8