Legal Question in Real Estate Law in New Jersey

If the seller "pays the down payment" it is the equivalent of a reduction in the sale price. There is nothing unlawful about reducing the price, but there could be a fraud on the lender if that arrangement is not disclosed to the lender during the loan application process. If the property is being sold below market value, the lender might not object. However, if the effect of the deal is to deceive the lender into providing 100% financing for a deal in which it would otherwise have provided less, then seller and buyer have conspired to defraud the lender. Offhand, I can't think of any reason for the seller paying the downpayment except as a way around the lender's policies. That is not advisable for either seller or buyer because it exposes both to tort claims for so long as any part of the debt is outstanding. /p/ See also: http://info.corbettlaw.net/lawguru.htm