ARE SELLER’S CONCESSIONS ETHICAL?
A Review of Ethics Opinion 817 Does an attorney’s participation in a residential closing with a “grossed up” sales price and “seller’s concessions” violate New York’s Code of Professional Responsibility? According to the Committee on Professional Ethics, “a lawyer may not ethically participate in such a ‘gross up’ of the actual purchase price and concomitant seller’s concession, unless there is neither deception nor misrepresentation at work in the transaction.” The facts considered by the Opinion involved an agreed sales price that was then increased by 3%, in return for which the seller granted the purchaser a “seller’s concession” in the same 3% amount. The artificially inflated purchase price enables the purchaser to obtain a larger mortgage, based upon the increased contract amount and, in theory, use the additional mortgage proceeds to cover closing costs. The Opinion expresses that, at a minimum, the gross up and seller’s concession must be fully disclosed in the transaction doc
