Has a bank declined to pay your option fee?

This hasn’t happened to me yet, but has for a friend of mine. He was trying to get paid a $15k option fee on a simple $150k deal, but the bank funding the buyers loan balked on paying the fee even though it was to come from the sellers proceeds.

Have any of you had this occur? If so, how did you overcome it?

A couple of questions need to be answered here. Is the person you mentioned a licensed real estate or mortgage agent? Why is he trying to get it from the bank and not the seller? Was the fee spelled out in the paperwork? Are there any laws in the state about what kind of fees can be paid and to whom?

The banks legal department may be afraid of a law suit from the seller if everything in the paperwork wasn’t perfect.

Neither; the person was an investor like me. The way an option works is that you get the seller to accept one price and a third party buyer to agree to make a purchase for the property at a higher one; you pocket the difference as an option fee. The seller pays the option fee out of the gross sales proceeds on his or her side of the HUD 1 form. The option agreement is disclosed to everyone in the sales contract. The bank that is funding the deal for the buyer may or may not like to pay out on options.