LEGAL HOTLINE ARCHIVE
Incentives

Q. Can a Seller offer a cash-back at closing incentive to a prospective Buyer? The Seller's rational is that the Buyer could use this cash as part or all of the required down payment. The Seller also is offering to pay some of the Buyer's closing cost and some of the required flood insurance premiums. Is this on the verge of "dual contracting"? Would it be up to the mortgage company if they would accept a transaction like this?

A. We are not aware of any law, ruling or regulation which prevents a seller from offering cash back at closing or paying some of buyer's closing costs. However, the agreement among the parties as to who will be responsible for paying what should be put in writing in the Purchase Agreement. Each mortgage company tends to have its own rules regarding whether a seller or buyer can pay certain cost. Those that do allow fees to be paid by another party to the transaction will almost certainly want the consent and agreement of both parties in writing prior to accepting such payment.

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