Legal Questions & Answers

The Seller Signed A P & S Agreement To Pay Our Closing Costs Of Our Needham Home.

Additional Information:

We are buying a home in Needham, MA. The seller signed a purchase and sale agreement to pay for our closing cost, but he says he did not know that what he signed was actually to do this. The sellers now understand that what they signed is seller’s concession towards buyers closing cost but the sellers never intended to pay the buyers closing costs and they don’t even have their own seller’s agent in an attempt to save money and not pay a realtor commission. My question is, are they liable to pay for our closing costs?


Yes, the seller will be liable to pay for your closing costs. The purchase and sale agreement is a legal contract. However, the maximum amount the seller can pay may depend on the loan program, and, in some cases the amount you’re putting down to purchase the home. For example, for FHA and USDA loans, sellers can contribute up to 6% of the purchase price towards closing costs. For FHA loans, seller concessions will soon be reduced to 3%.

The Lender may decide to disallow a specific expense on the “Closing Statement”. The Government approved closing statement is called a HUD-1, and the buyer and seller are given one to approve at the closing on the sale. The HUD-1 lists the details of all expenses and payments in the sale, and it is on this document that the lender may disapprove of an item.

Since lender approval of the HUD-1 is the final step standing in the way of completing the sale, buyers often accept the lenders terms, even though it is their loss. However, if you are lucky enough that the seller contracted to pay the buyers closing costs, then the seller is liable and he will be responsible for covering the closing costs he contracted to pay for. If he refuses to proceed with the closing, you can sue him to complete the transaction. That is called a suit for specific performance. The alternative is to re-open the negotiations, which can be a quicker approach.

Needham Closing Attorney Alan Segal provides legal representation for all real estate transactions and serves individuals and business in Needham, MA and the surrounding Greater Boston region including: Newton, Dedham, Westwood, Dover, Natick, Wellesley and Weston.