Overpaying to fund rehab costs

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Duplex for $160k. Needs about $40k in rehab. Is it possible to come up with an arrangement with the seller to agree to their $160k but pay $200k then after closing have the seller give me the $40k back and I use that for the rehab? Obviously I would back it up with a contract make sure I can trust them on it first. Only other thing is making sure it would appraise out at $200k. It's enough under market that it could fly. I assume if the bank knew about it they might have some rule against it. Thoughts?