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#1651598 - 01/17/12 05:13 PM Seller Participation
biz Offline
Diamond Poster
Joined: Nov 2005
Posts: 1,032
Midwest
We have the seller of a piece of property (Prop #1)who took out an equity loan on Prop #2 to assist the buyer of Prop #1 in purchasing the property.

The required use of proceeds of the equity loan on Prop #2 was used to pay down (not all) of the balance of the mortgage the seller currently had with us on Prop #1 and do improvements to Prop #1 so that the buyer of Prop #1 will purchase the property and payoff the remaining balance of the sellers loan on Prop #1 with the closing proceeds from the loan the buyer will be taking out with the purchase of Prop #1 .

Is the equity loan the seller will be taking out-reportable? And if so-as what?

Thank you.

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#1651606 - 01/17/12 05:20 PM Re: Seller Participation biz
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,016
Bloomington, IN
Quote:
We have the seller of a piece of property (Prop #1)who took out an equity loan on Prop #2 to assist the buyer of Prop #1 in purchasing the property.


The loan on Prop #2 to the seller of Prop #1 is not reportable. It is a "gift" loan to the buyer of Prop #1. It does not meet the definition of a home purchase therefore it is not a home purchase loan for either the seller of Prop #1 or the buyer of Prop #2.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1651612 - 01/17/12 05:23 PM Re: Seller Participation biz
biz Offline
Diamond Poster
Joined: Nov 2005
Posts: 1,032
Midwest
So it wouldn't be a home improvement-since part of the funds will be used to complete improvements on the property being sold? I don't see where the loan for improvements has to be on the same dwelling being improved.

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#1651647 - 01/17/12 05:48 PM Re: Seller Participation biz
Dan Persfull Online
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,016
Bloomington, IN
I missed the improvement portion of the post. However, if this is a temporary loan that will be paid with the proceeds of the sale from the buyer of Prop #1 it still would not be reportable.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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