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In short, we are giving our buyer the full 3% seller assist that her mortgage permits. She also wants sewer line insurance, which we agreed to pay for. Since the insurance is not transferable, we were asked to just cut her a personal check. My agent made it seem very hush-hush, as in "send it to me in a sealed envelope, so the closing company doesn't open it, and I'll make sure she gets it". (I'm signing from out of state)
The insurance is only $250, so it's nothing worth raising a stink about, but I was just curious if this sort of thing is allowed or common. Are people like "Oops, you know I may have left some cash in the kitchen cabinet *wink wink*"?
Have your title company collect the $250 on your side of the CD and then send the check directly to the sewer line company. I'm not a fan of doing something outside of settlement, especially as you'll likely be signing a document at closing that there are no arrangements outside of the paperwork in front of you.
If you are already providing the full allotment that she is allowed by her lender, the $250 may not be legit.
The lender may allow you to provide the check made out to the sewer insurance company as kww says.
I would investigate that angle with the lender before sliding $250 under the table to a borderline qualified buyer.
If you are already providing the full allotment that she is allowed by her lender, the $250 may not be legit.
The lender may allow you to provide the check made out to the sewer insurance company as kww says.
I would investigate that angle with the lender before sliding $250 under the table to a borderline qualified buyer.
This, but if you just have "sewer insurance" listed as a seller charge line item on the settlement statement it's probably all well, good, and legal and the lender probably won't bother to question it.
I can only answer from my perspective but I'm not aware of any cash under the table scenarios in any of my closings. It's illegal and not worth the fine, license, or jail time I could face for it. I have often had charges on the HUD for the seller to pay at closing though.
When sellers pay for say a home warranty, it is not considered part of the seller paid closing costs that is limited to 3%. I would say the same would pertain to "sewer line insurance" which I have never heard of as a stand-alone. Isn't that typically part of a homeowner's insurance policy.
I would think you could just add the $250 as a seller expense on the settlement statement with no credit on the buyer's side. I agree with the others that it should not be done under the table.
When sellers pay for say a home warranty, it is not considered part of the seller paid closing costs that is limited to 3%. I would say the same would pertain to "sewer line insurance" which I have never heard of as a stand-alone. Isn't that typically part of a homeowner's insurance policy.
I would think you could just add the $250 as a seller expense on the settlement statement with no credit on the buyer's side. I agree with the others that it should not be done under the table.
Most HOI policies won't cover replacement of a failed sewer line.
In my case, I was the buyer and asked for repairs. The seller needed the money from closing to complete the repairs. After closing, he cashed the check, went to the bank and got me a certified check instead of completing the repairs himself.
I wouldn't be comfortable with something that the agent is telling you is hush hush. Did you ask why it needed to be handled this way?
The most similar thing I came across was as a selling agent years ago. The buyers side asked if we would give them back a 500 check at closing because the sprinkler system didn't work. Sellers were OK with it, but I explained to the buyers agent that the lender may not agree to let this happen and it would be on him to make sure this was OK with the lender to get this done in escrow. He kept saying it was all good though he obviously had no idea. Long story short it wasn't, nothing about it was on the closing statement and it didn't happen. I get a call a few days after the thing records and he's telling me the seller needs to write them a check. By then it is too late. He actually told me he never reads closing statements and all of that is the lender and title companies job and this was every one elses fault by his. They didn't get their 500 bucks and he didn't last long in this business.
Last edited by I love boots.; 11-30-2017 at 11:58 AM..
They're doing this because if the mortgage company hears that the buyer is getting more from the seller, they may cancel the mortgage.
I don't think that's it. My post above yours explains it. Lenders don't usually allow for a buyer to just walk away with a check in hand. Money can be held in escrow and gone about the right way with invoices from contractors showing work being taken care of it can pay for things that way. I'm thinking what would too often happen is the buyer just pockets the money otherwise.
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