In this post “grossed up sales price” is a price higher than the real price. A party to a real estate transaction sometimes proposes the use of a grossed up sales price in order to achieve a result – the closing of the transaction – that would otherwise be unlikely or impossible.
Lawyers may not assist clients in transactions that are dishonest or fraudulent.
Generalizations sometimes fail in the context of specific facts. The purpose of this post is to raise a red flag. Whenever a lawyer encounters a proposal to inflate or to “gross up” a sales price, or to account for seller concessions by increasing the sales price or use an otherwise inaccurate sales price, she should refuse unless, having thought through the specific facts of the proposed transaction and considered them in light of the Rules of Professional Conduct and other law, she reasonably concludes the transaction and her participation in it is permissible and does not, for example, involving making a false statement of fact on a HUD-1.