The buyer and seller executed the February 2017 version of the AAR Residential Resale Real Estate Purchase Contract. 

In Section 2j, the seller agreed to Seller Concessions of up to 4-percent of the purchase price. As a condition to funding the loan for the buyer, the lender is requiring that interest from the date-of-closing through the first mortgage payment and twelve months of homeowner’s insurance premiums be paid at closing.

The title company has taken the position those items are not “loan costs” and therefore are not part of Seller Concessions as the term is defined in Section 2j.


Do Seller Concessions as defined in Section 2j include interest from the close-of-escrow through the first mortgage payment and homeowner’s insurance premiums?


See discussion.


Both interest and the homeowner’s insurance premiums are costs that the lender requires to be paid as a condition to funding a loan. Thus, those items are considered to be loan costs as that term is used in Section 2j. Accordingly, the interest and homeowner’s insurance premiums would be included in the Seller Concessions as agreed by the parties.