Commercial Real Estate Credits?

[Ryan Sajdera]

Can anyone shed some light onto the topic of credits when financing a commercial deal? I’m guessing this is similar to a concession on the residential side but I can’t find any info on it. I met a guy who said he used a deferred maintenance credit to help offset his down payment.

Example: the buyer and seller negotiate a $900,000 property down to $800,000. The buyer finances the property for $900,000 and the seller gives him back $100,000 as a “deferred maintenance credit” which he uses to offset his down payment. Do banks allow this? Does anyone use anything similar to negotiate financing? Thanks!

[Nik S.]

@Ryan Sajdera

I negotiated a 100k+ credit for deferred maintenance and the bank is holding it indefinitely in an interest bearing account. They will disburse funds as the work is finished (receipts required). My original thought was to use it towards the downpayment but didn't work out like that. The lender wanted assurance that the credit would solely be used for the building improvements only.