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Seller's Contribution - whose responsibility is it? what are my rights?
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January 18, 2011, in Legal

I put an offer on a condo that is in short sale and the seller's realtor said that the seller is asking that the buyer (me) write them a check for $10,000 to cover the seller's contribution. Why am I not dealing directly with the bank and being asked to write an individual a check for that large of an amount? What are my rights and negotiating power in this situation? My realtor told me that he was told that the sellers are in default and owe the bank $10,000 in seller's contribution...and the bank is expecting the seller to write the bank a check. Which is why the seller is asking me to write them a check and not the bank. If they owe the bank, and the bank wants a check from the seller and not me...then can they really expect me to cough up 10 grand?

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Brett Ehart    January 18, 2011

The easy answer is no, you do not have to pay the $10k. But of course, then the short sale will not go through, because the sellers won't pay it either.

For you to pay the sellers outside of escrow is risky, and could be illegal. You might want to consult an attorney before you go any further. The reason it could be illegal is because you are hiding it from the lender, and that could be loan fraud(a felony in California). It's risky, because what happens if you pay the seller and they don't pay the bank? Or the short sale doesn't go through for some reason? You would have a very hard time recovering $10k from people who are in bad financial condition.

It is up to the seller's agent to negotiate a fair deal, and that does not include you doing anything illegal. If you want to make the payment, insist that it be done through escrow so you are protected.


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