Releasing funds to seller prior to closing?

[Greg Gaudet]

Hey All, 

I'm pretty sure I already know the answer, but in an attempt to better serve our seller and go above and beyond, I wanted to ask the community for the off chance that someone knows of some way to structure this. 

Deal:

We're under contract to buy a house for 625k, that we'll be flipping. We will do 75-100k rehab and ARV is 850-900ish. The seller asked if he could get some cash, about 25k, prior to closing for moving expenses and utilities. I told him there is no way to do that in which the buyer is protected, but we could do a seller rent back. So instead of closing in 30 days we are closing in 14 days, at which point he'll get most of his cash proceeds, and he'll have 2-3 weeks to move out from then. We're 1 week into escrow and he text me today asking again if he can get 25k prior to closing. Told him that I don't think there's a way to do that safely, but I would do some research just in case there's a structure that I'm not aware of.

The only ways I know how to safely get him cash sooner are: 1. seller rent back (we're already planning on doing this one) 2. offer to release 25k now in exchange for a 50k price reduction to justify the risk, and if he tried to breach contract or cancel the sale we could record a 50k lien on title (but that means we may have to wait decades to get our money back if he doesn't sell now) 

Anyone ever done this? 

[Sergey A. Petrov]

I'd never advise my client to do it. I would, however, as required tell my client/buyer that the seller made the request and you advise against it. If it were a personal deal, I'd consider it subject to a second deed of trust or a signed confession of judgment with a signed quit claim deed that I could record, provided there is enough equity in the property, with a price reduction or some other financial or other incentive to me. But my risk tolerances are generally higher than average...