Purchaser looking for "cashback"

Hi All

Have recently gone sale agreed on our apartment although no contracts signed as yet. The purchaser has contacted us looking to get some cashback.

i.e.
Sale price agreed at X -
Amount paid X + €5k.
We hand back cheque for €5k

I think this is so they can get 100% mrotgage for larger sum and use the extra to pay for furnishings.

Net effect for us is the same - I think, I can't see anything wrong with it as I wont hand back any monies until I receive more that I was expecting.

Appreciate others opinions on this.

thanks
Paddy

Have you run this by your solicitor? Potentially there could be tax implications for you and/or the purchaser.

It seems that the purchaser would have to pay tax on his own money. However if it's your PPR, then it seems unlikely that you would lose out (apart from perhaps a slight increase in solicitor fees due to the new purchase price).

I would imaging such a thing could never be put in the contract.... so I can't see how they would ever enforce it if you didn't pay

Fraud on the lender by the purchaser with you a willing accessory.

Purchase price in Contract must be Purchase price in Deed - precisely so that lender does not over-lend on the property and potentially find themselves in difficulty if they need to repossess.

And if its all underhand, how does anyone police it if it all goes horribly wrong and Vendor says thanks very much for the extra money?

Stay away from it. Its not creative and harmless- its fraud.

mf

your estate agent fee ( a percentage of the transaction) would also increase, wouldn't it?

Stay away, I'd say. There's nothing in it for you.

Camry - a huge difference in reality - this is not trying to engage in multiple borrowings on the same asset - I trust you are not suggesting I don't have morals.

Thanks MF1 - seems very clear cut from that point of view. however a few additional details below

I sold directly - at 15k under an estate agents valuation, wanted a quick sale - From a lenders point of view the value of the property is still what they will pay (all things being equal) - in order to encourage the sale I am giving a discount - which I had been viewing as splitting the estate agents fee that was not paid.

Would you still think this is inappropriate?

cheers

I do think its inappropriate. I can also see how, to get the sale, you want to do whatever you can to make it go through. But its a lot of hoop jumping with no benefit for you other than closing the sale and it is still a fraud with you a willing participant.

They want the (actual) sale price not to be disclosed to their solicitor I assume. So all round the sale price will be XK + 5K. It will be on the contracts and the Deed and their loan paperwork. And it will be up to you and your purchaser to work out how that extra 5K is paid back. And how at the end of it all, can they get the money from you - should you turn rotten!!!!

"From a lenders point of view the value of the property is still what they will pay (all things being equal) "

I don't understand that - the amount of the mortgage depends on your purchaser and you lying about the price and means that the lender is being hoodwinked about the value of the property. The value of the property is X - even if it is less than an estate agents value, its what you can sell for.

"- in order to encourage the sale I am giving a discount - which I had been viewing as splitting the estate agents fee that was not paid."

But this has nothing got to do with you all lying on a Contract and Deed about how much you are selling for.

And no, I can't see how anyone would ever find about it but I would prefer any of my clients not to be involved.

mf

Paddy - I think you realise that it's fraud on the lender. Your most recent post only gives reasons why it might be considered justifiable.

I think it boils down to an ethical question which only you can answer. "Is committing fraud on a lender acceptable if it's only a small amount and will probably have no repercussions on anyone involved?"

Assume your house was worth ten times what it is. You discounted the price by €150,000 for a quick sale and the purchaser wants you to claim the purchase price is €50,000 higher for the purposes of the mortgage. Would you still do it? If not, why not?

Thanks for the responses all - think its pretty clear now - although I genuinely didn't ask this question thinking there could be any legal issues - which I won't entertain.

I am still in the same situation now that my purchaser will potentially pull out as they have a liquidity issue - I have avised them to look for a 3 month refferal on the mortgage repayments.

Failing that being allowed - I had another thought - could I set the closing date at say Feb but hand over the keys in Dec (once contracts signed)?

This way there is no adjustment on the agreed value/purchase price, yet they won't have to pay a mortgage payment until Feb/Mar.

Paddy

paddyodoors said:

Thanks for the responses all - think its pretty clear now - although I genuinely didn't ask this question thinking there could be any legal issues - which I won't entertain.

I am still in the same situation now that my purchaser will potentially pull out as they have a liquidity issue - I have avised them to look for a 3 month refferal on the mortgage repayments.

Failing that being allowed - I had another thought - could I set the closing date at say Feb but hand over the keys in Dec (once contracts signed)?

This way there is no adjustment on the agreed value/purchase price, yet they won't have to pay a mortgage payment until Feb/Mar.

Paddy

Click to expand...

Are you for real ?

Why not?

What is there motivation for closing at all if they can occupy your house rent and mortgage free until you get an eviction order?

Sarah W

Why don't the purchasers just get their furniture on Hire purchase or raise a personal loan? Come to think of it, and this is no help to you, it's a sad state of affairs for someone not to have saved the price of a couch or bed (let alone a deposit) and end up in a position to buy a place.

"I am still in the same situation now that my purchaser will potentially pull out as they have a liquidity issue - I have avised them to look for a 3 month refferal on the mortgage repayments.

Failing that being allowed - I had another thought - could I set the closing date at say Feb but hand over the keys in Dec (once contracts signed)?

This way there is no adjustment on the agreed value/purchase price, yet they won't have to pay a mortgage payment until Feb/Mar."

But is it not just the case that they cannot afford to buy? Its not rocket science but if they want to buy anywhere they need to have the money and if they haven't got the money, they can't afford to buy.

A closing consists of the Vendors solicitor handing over Deeds, keys and vacant possession in exchange for all the funds. Its that simple - any deviation from that can lead to problems - e.g. money received but Vendor still in possession - bad idea. No money paid by purchaser but he takes possession - why should purchaser ever bother completing?

mf

DerKaiser said:

Come to think of it, and this is no help to you, it's a sad state of affairs for someone not to have saved the price of a couch or bed (let alone a deposit) and end up in a position to buy a place.

Click to expand...

Why would that be? I listen to endless stories from people of older generations going on about how for the first 18 months after they bought their houses they sat on orange boxes and used dust sheets for curtains.

One question, did you engage an estate agent to act for you and was he or she responsible for you and the purchaser getting in contact?
If yes then they can sue you (and will win) for the fee that they would have charged.
If you did not meet the buyer through the estate agent but you have not informed them in writing that you no longer wish them to act for you then they can do the same thing.
Even if you did inform them that you no longer want them to act for you, you are still liable for advertising costs etc.

If you just got a valuation then you are in the clear.

Sherman said:

Why would that be? I listen to endless stories from people of older generations going on about how for the first 18 months after they bought their houses they sat on orange boxes and used dust sheets for curtains.

Click to expand...

There were no 100% mortgages back then

I agree this is going against the 100% mortgage max criteria, but in reality how is it different to a builder of a new estate offering a free car with a house??? That's all legal and acceptable and it's to the tune of 15k beyond the 100% mortgage....

delboy159 said:

in reality how is it different to a builder of a new estate offering a free car with a house??? That's all legal and acceptable and it's to the tune of 15k beyond the 100% mortgage....

Click to expand...

My thoughts exactly Delboy - in Tyrellstown, they were offering to pay the first 6 months of the mortgage - maybe I am being niave, but I thought I could just aligning myself to that strategy in order to encourage a sale? (although I was only thinking to do 2 months).

I guess the difference seems to come down to stamp duty which wouldn't be applicable for new builds?

Paddy