All Forum Posts by: Bruce Thomas

Do you disclose to the first mortgage lender that there is a second mortgage?  Or do you claim the down payment you're borrowing from this DPA company is your own money?  Commercial loans aren't the same as residential, though.  On a residential loan if you didn't disclose your down payment was borrowed you'd be committing loan fraud.  With commercial that's not always the case.  That said, still better to disclose the hide.

I think you still have to come up with $50K out of pocket in your example.  You're claiming the purchase price is $1 million when its really $750K.  You're getting a $750K first and a $250K second.  That lets you close, though you'll have to cover your side of closing costs out of pocket.  After costs, the seller would get maybe $930K (based on your numbers).  After closing, the DPA company want's $280K.  That leaves the seller with $650K.  That's $50K sort of the $700K they were expecting based on the true $750K purchase price and $50K in costs.  So you're going to have to come up with that $50K.

Is what legit? Could you provide more details?

Have you signed and LOI or purchase and sale agreement?? LOI is typically non-binding on each party unless it says so.

If you have already executed a purchase and a sale without a broker or an attorney looking at it and you do not have the experience that was a bad move.

There are usually inspection periods built in and a finance contingency where you keep all your EM but it varies what is in the contract. Hopefully you are not letting the sellers attorney, title company, or the seller hold the EM. Even if per the contract you are due it they can be very difficult in trying to get it back and sometimes force you to go to court if the EM provision is worded a certain way.

If you no longer want to buy this property and want to get out of it or want to buy if the seller reduces you really need to know what you signed and what your outs are before making such a move. Might be a good idea to let an attorney for a few hundred look at it for an hour consultation.

No legal advice given.