In the short sale offer I just made on a property, I took into account some $$$ (which I would give them outside the offer price) to help the owners move and set up elsewhere (otherwise they might never leave because they have nothing). However, I’ve just read that the banks might not accept the owners receiving any cash and not to inform them might be fraud.
Can anyone tell me if this is the case, and if so, how on earth can I help these poor people to start again elsewhere? (I’m not an investor - I am looking at the property as a home).
you CANNOT give the sellers any proceeds at all. For your protection try to not give it out of closing. BUT you CAN buy Personal Property / Asset (junk) from them and keep yourself a Bill of Sale for reciept purpose. It might be a $2000 broken down entertainment center and antique broken lamp.
Great info Vhatien! Tell me - would that transaction also constitute fraud if discovered (presumably it would count as a liquidation of assets), even though it would be difficult to discover?
No fraud involved. You are simply purchasing items from another individual. Who says that an individual can not liquidate their assets? Is it a bankruptcy issue?
Get a bill of sale to protect yourself and remind them that the government counts that money as income.
like bovine. dri, you must realize a house and personal properties are different aspect. if the owner loses the house to foreclosure, does that mean the bank will take their wedding ring? or car? no. there is no fraud, there is only legal ways around obstacles. creative investing right?
The bank does not want the homeowner to receive any monies at closing. That means the HUD-1 must zero out on the sellers side. As long as this condition is met you’ll be fine. Anything you agree to with the homeowner post-closing is not the banks business. There is no fraud since this second transaction is seperate and distinct from the first.