Asking price including money to be paid to owner

bohsfan

Hi all,

I became very interested in a property recently. It was advertised at a certain price within my means. Did viewings etc.

When I made an offer the agent informed me that the asking price was to be made up of a certain amount for the property and another payment made directly to the current owner.

Eg. The house was advertised as €300000. The final breakdown would be €260000 to the bank for the house with a bank transfer of €40000 to the owner.

I'm guessing the bank has put pressure on the owner to sell and agreed a certain price and the owner is trying to make a bit extra on top.

Has anyone heard of anything like this before? Would there be any implications to this kind of deal?

I'm going to get my solicitors opinion on this, but I was just wondering what you guys thought of this scenario?

seamus

Sounds very suspect, definitely sounds like they're trying to pull some kind of stroke here.

To the best of my knowledge when selling a house with a mortgage attached, the entire sum paid goes to the bank which holds the mortgage, who then clear the mortgage and transfer the balance to the homeowner. I've never heard of the purchaser having to split the payment.

ted1

You won't get a mortgage for the cash payment, revenue can bring a case Againest you for evasion of stamp duty if you don't declare the full amount.

bohsfan

The money to the owner is being dressed as 'fixtures and fittings'. If I were to go ahead I would declare the full amount to revenue.

The property first came on the market almost a year ago, and disappeared for a while. I'm guessing the bank have clearance to sell at a certain amount a while back and the owner is trying to pocket the value rise that has taken place since.

It all makes me a little uneasy.

Dr Turk Turkelton

Hi op had a somewhat similar situation last year.
The difference was the owner had no mortgage so was getting all the money anyhow.
The estate agent/auctioneer she was using valued all the items she was leaving and these were not part of the sale price.
It only saved a cursory amount for us on stamp duty but left us well before the treshold for the next jump in property tax rates which could end up being useful in the future when prices have to be reassessed especially with the way process are going.
So it could work to your advantage as your house would be valued at €260,000.
If the average price rise between now and when the tax has to be reassessed is 10% you will still be well below the €301,000 mark.
If the house is valued at €300,000 and a10%rise will put you well into the next category.
In summary this could work out to your advantage.

L1011

The owner is almost certainly attempting to screw his likely state owned and taxpayer rescued bank out of that 40k. As said, for mortgage purposes, the house would be 260k if you do this - are you able to buy it then?

the groutch

sounds like possible CGT/Stamp Duty evasion.
I would run a mile.

Dr Turk Turkelton

Sorry have just reread it was for fixtures and fittings and not contents.
Would be looking at Saddam Hussein levels of gold toilet bowls etc to cover all that!
Sorry op he does sound dodgy.

seamus

bohsfan wrote: »

The money to the owner is being dressed as 'fixtures and fittings'. If I were to go ahead I would declare the full amount to revenue.

This is a very old scam, one which is no longer legal. It used to be possible to declare the price of the property separately from the cost of fixtures, fittings and furniture, so it was common to declare the latter as a big cost in the property and the buyer would only pay stamp duty on the balance.

This loophole was closed and now the full price paid for the property must be include any contents that are part of the sale. People still do deals separately if they're including single big pieces of expensive furniture (e.g. a grand piano), but €40k sounds like a scam.

I'd probably blacklist the agent as well. If they're willing to be complicit in this, then I wouldn't buy a house from them, you don't know what kind of lies they'll tell you.

You could report him to IAVI, but that's up to you.

gaius c

No reputable solicitor would allow themselves to get involved in this.

Edit: thread on the pin about the same subject.

L1011

seamus wrote: »

You could report him to IAVI, but that's up to you.

The IAVI are gone and would have been a chocolate teapot in this case - the PSRA on the other hand will be far more interested.

BookBook

I was asked the same thing recently by an estate agent. 10k for ‘fixtures, fittings and furniture’. Owners were in negative equity with kids and house was in disrepair. The bidding had gone up to x and I noticed a few months later the price on the property price register was actually 15k less that last x bidding price. I was surprised the EA was so open about it all.



I mentioned this to another EA to see their reaction and they didn't seemed surprised. They said that it happens as usually the owners need something to help them with removal costs and finding a place to live and get set up etc. So I assume this EA also arranges these deals.

Stella Virgo

sounds like a repo/nama/builder property. friend of mine looked at a unfinished house in oranmore a month ago. auctioneer said he would get it at a good price, but he would have to make a "direct payment" to the builder as well...

bohsfan

We absolutely love the property, location is spot on, would suit us for the medium term for sure. If the asking price was to be paid straight to the bank we would jump at it.

While we have the cash to follow through on the proposed structure of the deal, the shadiness of it all unsettles me. I guess my solicitor might shine a light on it!

The_Conductor

bohsfan wrote: »

We absolutely love the property, location is spot on, would suit us for the medium term for sure. If the asking price was to be paid straight to the bank we would jump at it.

While we have the cash to follow through on the proposed structure of the deal, the shadiness of it all unsettles me. I guess my solicitor might shine a light on it!

Report the Estate Agent to the Property Services Regulatory Authority.
They are very interested in agents who are playing these games........

doubter

Might also be a case that the house is in negative equity, and the bank is taking less than they've forked out to settle the mortgage(no sympathy to the banks here), but you could get in trouble for going along with this. Get solid advise from a legal person and if in doubt..get out.

MysticalRain

I ran into a similar situation a few months ago with a property I went sale agreed on (a BTL landlord with 3 properties, one of which he was being forced to sell by the bank). The estate agent asked for a 6000 euro top up to cover the seller's "expenses". Against my better judgement, I reluctantly agreed. Then a week later he was back looking for another 6000 euro on top of the previous amount. I ended up walking away and buying another place in the end.

The_Conductor

MysticalRain wrote: »

I ran into a similar situation a few months ago with a property I went sale agreed on (a BTL landlord with 3 properties, one of which he was being forced to sell by the bank). The estate agent asked for a 6000 euro top up to cover the seller's "expenses". Against my better judgement, I reluctantly agreed. Then a week later he was back looking for another 6000 euro on top of the previous amount. I ended up walking away and buying another place in the end.

Report it.
It is fraud.
You- as a tax payer- are funding these shenanigans.
Encountering it- and doing nothing about it- is acceding to it.
Report it.

JimsAlterEgo

The_Conductor wrote: »

Report it.
It is fraud.
You- as a tax payer- are funding these shenanigans.
Encountering it- and doing nothing about it- is acceding to it.
Report it.

probably more for the legal forum but are you obliged to report something like this?

The_Conductor

JimsAlterEgo wrote: »

probably more for the legal forum but are you obliged to report something like this?

I'm not aware of their being an 'obligation' to report the fraud- though obviously its in everyone's interest that any incidents of fraud, such as this- that they encounter........

MysticalRain

The_Conductor wrote: »

Report it.
It is fraud.
You- as a tax payer- are funding these shenanigans.
Encountering it- and doing nothing about it- is acceding to it.
Report it.

I definitely agree. I needed to get my deposit back first (which I have received now).