Question: I am buying a commercial building using 80% lender financing, and 20% seller financing.  I signed a contract with the seller reflecting these terms.  However, my lender told me it will only allow 10% seller financing.  I simply don’t have the money to cover the additional 10% myself.  What are my options?

Answer: When crafting commercial purchase agreements, think of your lender as a quasi-partner.  Unlike a residential lender, commercial banks or commercial mortgage companies have more control in your transaction.  Though a deal may sound good to you, and your seller, be sure to review all terms with your lender for preliminary approval.  Otherwise, you may wind up in your current unfavorable position.  You have options, though.

First, apply all applicable seller credits and adjustments.  This will reduce the amount required to close.  For instance, if the property has tenants, your seller will credit you for any security deposits held.  A rental adjustment will also benefit you financially, in the short run.  By applying these credits, your 10% required figure may be reduced to a lower percentage.

Next, try to borrow the required funds from any available source.  Perhaps your primary residence can be used as collateral for an independent loan from the seller.  Your bank may also grant an equity line of credit against your home.  If these are not realistic options, you can always seek family member assistance.  Just remember to factor the increased holiday gift obligation that comes with being indebted to your father-in-law.

As the old saying goes: if you can’t afford to kick in 10% of your investment, you shouldn’t be making it after all.

Attorney James Haroutunian practices real estate law, estate planning and small business formation in Billerica at 790 Boston Road.  Contact him with questions at 978-671-0711,,, or email him at

Mortgage, House, Money, Finance, Banking

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