This is essentially correct. Now that I’ve thought about it, I really don’t see how it isn’t check kiting.
I’m still not getting this. It’s illegal for the seller to say “Hey, if you buy my house, I’ll give you my tractor?” or something like that?
Is Nars Glinley actually someone famous? I don’t recognize the name, I’m guessing he’s a regular poster you’re familiar with. I don’t see why banks would make an exception to their policies or states exempt him from real estate laws, “We don’t need to worry about legal issues, this is for Nars Glinley” seems kind of unlikely.
Me too. I don’t find that situation very suspicious or unusual. I’d trust a US Army Captain to not issue me a bad check. (and, in fact, I’d trust most home sellers under similar circumstances) Deals bigger than this used to be done on a handshake. While there are always risks, I’d be comfortable with this one.
Technically it’s not - check kiting is when you write the check and claim to the receiver that the check is valid now, when you really won’t have the funds until later. Since the other party isn’t telling you that the check is good, it lacks the fraud inherent in ‘check kiting’ (though it’s doing basically the same thing otherwise).
I’m in MA, and there was no issue buying/selling personal goods at the closing, right in front of the attorney handling it. When I bought a house, I bought some furniture from the sellers and settled at closing, when I sold the house a few weeks ago, I sold the lawnmower & window A/Cs to the buyer, for a check at closing. No one cared beyond us.
No not illegal at all. In that case there would be no additional money changing hands and no one would care. Lenders want to be sure that all funds exchanged at closing are explicitly covered in the pre-approved contract docs. Any funds exchanged out side of that must be handled completely separately, at a different time and place (other than the closing table). Anything that even sniffs of being outside those contracts can shut down the closing.
As a slight tangent, my agent also told me a story about how a guy’s big mouth caused a closing delay of a week. During the latter stages of the mortgage approval process the buyer is heavily cautioned multiple times to do absolutely nothing that may affect their credit score - no inquiries, no new loans, nothing. At this particular closing the attorney noticed a brand new, still had dealer tags truck parked outside. He “casually” asked “Hey, anybody know who’s new truck that is? It’s a beaut!” The buyer proudly said “It’s mine, just picked it up!”. The attorney immediately shut down the closing until the lender could recheck the buyers credit. These folks don’t fool around…
Are you talking about like multi-million dollar closings, with lawyers and stuff?
The closing on my house had like 3 people there, none of whom were lawyers. I just find it hard to believe that after we signed everything, if I would have given a check to the sellers and said “Oh yeah, here’s the money for that fabulous shovel you left in the shed” and somehow everyone would have made a big deal about it. That’s the part I’m not getting.
Presumably the fundamental concern is that the nominal purchase price, upon which the mortgage lending is based, is not a true reflection of the value of the property. But I can’t find a clear reference describing exactly what this means in terms of how such a deal can be structured.
I’ve only bought and sold houses here in Connecticut (and they’ve only been multi-hundreds of thousands of dollar closings), and I don’t know if it’s required or just the usual practice here, but we have used the same real estate attorney for each of our home closings (two purchases, one sale, and three refinancings).
I believe the buyer actually pays for the real estate attorney out of their closing costs. For the sale of our last home, we proposed the use of our usual real estate attorney for the closing (via our real estate agent), and the buyer and their real estate agent agreed to use him for the closing, which was very reassuring for me.
I don’t have a particularly high opinion of real estate agents. I’d much rather have an actual attorney who specializes in real estate handle the paperwork, like figuring out who owes who money, holding the funds in escrow, obtaining title insurance, and filing the real estate transaction(s) with the Town Clerk.
Nope, not millions (or even million). Six people in attendance - Me and wife, seller and wife, my realtor and a closing attorney. In GA all real estate closings must be attended and handled by a GA licensed closing attorney.
As I said above, the attorney represents the lender’s interests. Even if there is no lender involved, only a closing attorney can distribute settlement funds.
Things could certainly be different in your state.
Fair enough, I’m just trying to understand why certain things would be a problem.
When I bought my townhouse, I had a check from the lender that I brought to the closing and after signing approximately 25 million documents, I gave the check to the sellers. Wasn’t more complicated than that. Nobody looked out the window for new cars or asked any questions beyond “Do you have the check?”
I don’t think that anyone cares about my fence allowance or the refrigerator that I’m buying. It’s just that the mortgage company doesn’t want anything to do with it.
I’ve closed on 3 houses so far in Oklahoma and Texas. Next Monday will be the 4th. No attorneys will have been involved. The title company distributes the funds.
That depends on the area- when I bought my house there were a number of people at the closing - including three lawyers ( buyer, seller and bank)
That’s cool, I realize different places do things differently. But you, as the buyer, needed a lawyer? For what?
To make sure the seller and the bank didn’t put something over on me. If the buyer and the bank both have attorneys looking out for them, why would I want to be the only unrepresented party in the room? In any event, I was going to need the lawyer to negotiate and review the contract ( which the seller’s attorney generally drafts) and the fee wasn’t going to be any lower if he skipped the closing.
Is Nars Glinley famous? Are you kidding? Dude’s a fucking legend around here.
Doctor Jackson’s post was premised on the seller and buyer working together to defraud the bank. And while I am sure that happens, I’m also confident that’s not the case here.
I’m also a legend in my own mind.
The problem is that the mortgage lender loaned you that money for a specific purpose: Buying the house. There are all sorts of insurance and rate regulations that are specific to a home loan, and your fees and interest rate are based upon those. It is not a home improvement loan to be used for erecting a fence.
I don’t mean that you should take the money out of your down payment. I mean that you should tell your lender you would like to add a small home improvement loan to your mortgage loan. Then have the seller lower the home price by the same amount.
This way you have the cash you need for the fence right away, the seller has credited you for the agreed-upon amount, and the lender is providing loan rates/documentation that agree with the intended purpose of the money.