Q: Is it legal in a real estate contract to inflate purchase price then have seller return money?
A buyer presented me with a contract with an inflated purchase price of $120,000 more. He is using a DSRC loan to buy it. He added an addendum stating I woud return $120,000 to him at closing for property management and maintenance. I was hesitant on signing and his broker told me because its a DSRC loan its fine and he does about 30 a week. Sounds fishy to me and even if legal wouldn't I pay capital gains on that extra money?
A: If it looks like fraud and smells like fraud -- it's fraud. The realtor is not your agent and you should never buy or sell real estate without a lawyer. Don't sign anything without having a real estate lawyer review it.
A: A DSCR loan is a debt service coverage ratio loan. It is a special type of investment loan that compares debt service, interest and principal paid on a loan, to the net operating income of the property. However, what this buyer is describing is mortgage fraud, and you definitely don't want to get caught up in it. Your real estate agent should be guiding you during this process and should also be able to see this fraudulent behavior. Please feel free to reach out for a free consultation, whether you are working with a real estate agent or not. An attorney may be able to spot suspicious behavior that a real estate agent cannot.
A: Reason 4, 623,862 that both parties in any real estate transaction should have an attorney's review, advice, and counsel.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
