Tenant relocation fee

[Opus 17]

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@tagteam wrote:

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@NCperson wrote:

If true, then the question for the lawyer / closing agent: as the seller am I taking on any risk by shading the truth on the reason for the seller credit?   

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As a lawyer, I would simply state that what the buyer does with the credit post-closing is essentially beyond the control of the seller.

If the lender or any other party would like further information as to the nature of the credit, it is incumbent upon them to inquire.

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As long as the credit is on the closing statement, I agree there are no negative implications.  I probably missed that part.  It's not really our concern or @jlo90275 's concern as to why the buyer wants to be non-specific about the credit.  Going back to the original question, @jlo90275  reports the sale using the credit as a reduction in the selling price, for purposes of capital gains and depreciation recapture.  That's all they need to worry about. 

[jlo90275]

Thank you all so much for your thoughts and suggestions!
The buyer is now willing to use this verbiage - “seller to credit buyer $15,000 for closing cost at close of escrow “.
Is this an acceptable solution for us? Thanks again!

[NCperson]

@jlo90275 it's fine, but since the buyer is seeking financing, the lender is apt to ask what that represents.

Not your issue if the buyer is going to finance AFTER he closes, but lenders lend on the basis of the LOWER of the sales price or appraised value.  Adding the $15k to the sales price may increase the representation of the sales price beyond its market value.  The lender is apt to net the $15k against the sales price for their analytical purposes when underwriting the loan. 

it COULD BE your issue if the buyer is seeking financing prior to closing of the transaction and it makes it challenging for the buyer to obtain that financing.

It's not a tax issue, it's an lending issue. 

[NCperson]

@tagteam all agreed.  All I was point out is that the financing could be a headache for the seller if it slows down the closing of the transaction. 

Many borrowers do not understand that lenders use the lower of sales price or appraised value during underwriting.  So "juicing up' the selling price may not have whatever the desired outcome is for the buyer / borrower. 

that is why I stated COULD (in all caps)  As you point out, we don't know. 

It's not a tax issue, but it COULD BE a financing issue. 

[tagteam]

j