Is NJ trying to outlaw seller concessions with Opinion 710?

doug · Joined: 07 Jul 2006 Posts: 9 3.11 Dollars($)

I understand the law stands in front of the NJ Supreme Court and it is a rulling that can stop the use of seller concessions in NJ. Has anyone seen or read anything about this? Supposedly this has been going on for close to a year.

gmakerley · Posted: Wed Jan 30, 2008 8:19 am Post subject:

i had not heard anything previously about this. hence, i googled opinion 710 and i discovered that the opinion is just that...an opinion of law. i did not find any evidence that this will strip buyers and sellers of the opportunity to negotiate concessions. what the opinion addressed is a specific instance in which a sales contract was manipulated in order to bypass a lender's maximum loan guidelines.

clearly, any efforts by buyers, sellers or their legal representatives to fraudulently affect a purchase price ought to be outlawed. the use of seller concessions is not at all fraudulent.

i hope this is sufficient clarification.

doug · Joined: 07 Jul 2006 Posts: 9 3.11 Dollars($)

Thank you, I do agree. I have an attorney suggesting a client not use the seller concession in his purchase because of the unknown future of the opinion. I think he is being overly cautious.

gmakerley · Posted: Wed Jan 30, 2008 8:33 am Post subject:

"overly cautious" may be an understatement also, doug.

if this case has been around for a year, as you intimated in your original post, then these cautious lawyers would have been eliminating concessions throughout that period.

i trust they haven't done that. we certainly don't find this happening in connecticut.

doug · Joined: 07 Jul 2006 Posts: 9 3.11 Dollars($)

This one attorney and his firm may have. I'll have to ask him. He does instill some fear in his clients or at let the one I am working with.

I'll keep you posted,

Jessica

Hi Doug,

So far as I understand, it isn't illegal to ask for seller concessions in New Jersey. However, the Opinion 710 came into being because a section of attorneys involved in real estate transactions were raising the home sale prices and then making the sellers pay for the buyers' closing costs. This is indeed a kind of fraud and in order to prevent this, there may be some attorneys who have stopped considering seller concessions.

However, it isn't against the law if the buyer is indeed unable to pay for the whole/part of closing costs and seeks the seller's contribution there. What I mean is, there should be proper negotiations between the buyer and the seller.

Regards,

Jessica

Guest

Thank you for your input. I have a very scared buyer who needs the assistance from the seller and the attorney has put the fear of going to jail in his head. He has since decided to go with the assistance but now the attorney may not represent him. There are many attorneys that I have spoken with who don't think my buyer is breaking any law. Thanks

Jessica · Posted: Thu Jan 31, 2008 11:56 pm Post subject: RE: not breaking the law

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.07 Dollars($)

Hi Doug,

If the home is purchased at or below the listing price then seller concessions should not be a problem at all.

jveenstra · Posted: Mon Nov 10, 2008 2:51 pm Post subject: Seller Concessions in NJ

I had a closing in NJ in summer of 2008 that involved this subject. The attorney happened to be on the ethics committee and taught legal ethics. Buyer got agreement from seller to get "money back" at closing for minor repairs after home inspection. Did not want to reduce price, wanted the money. No lender would allow us to credit "home repairs' on the HUD-I, so, I figured next best thing was seller concession to pay for the closing costs, just as good as getting money back for repairs.
Attorney would not do it "because seller concession was after the original contract and attorney review were completed." He would allow seller concession if part of the original contract. Because this is in fact, an opinion, many attorneys will do it and some will not. Most attorneys with whom I mention the subject never heard of the opinion and those that did, most will do the seller concession anyway.

gmakerley · Posted: Mon Nov 10, 2008 2:58 pm Post subject:

that the attorney wouldn't allow it at such a late date isn't all that surprising to me.

closing cost concessions are regularly seen, but most (if not all) lenders are going to require an amended purchase agreement or an addendum to the contract in order to approve it. at or almost at closing makes it tough.

could it be that the lender in that case was simply one that was conservatively looking at things - repair costs are never going to be allowed; maybe they knew that's what it really was

Guest

As you are in all your comments, you are correct. However, amending the contract for seller concessions is something we do all the time. Everyone was willing to do seller concession, except for the attorney.

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