Gwen Fowler Real Estate, Inc.
https://www.coolmountainescapes.com/blog/cash-is-the-anwer-but-only-if-it-is-available

Cash is the Anwer, But Only if it is Available

Posted By: Gwen Fowler In:
Date: Wed, Jun 25th 2025 3:17 pm

To determine if a contract is truly for cash or if the funds are coming from other sources like a HELOC (Home Equity Line of Credit) or other loans, here are the steps you can take, along with the legal aspects of what you can request:

1. Request Proof of Funds
You are within your rights to request proof of funds for a cash offer. This is standard practice in real estate transactions to confirm that the buyer has the necessary funds available.
Acceptable Proof of Funds Includes:

Bank Statements: A recent bank statement showing the available balance sufficient to cover the purchase price.
Letter from the Bank or Financial Institution: This letter can confirm that the buyer has the necessary funds available.
Certified Financial Statements: A document from a certified financial planner or an accountant verifying the buyer’s liquidity.
2. Examine the Source of Funds
In some cases, buyers may be using a HELOC or other lines of credit for the transaction, which might still be considered cash offers in some contexts. However, this is different from the traditional “cash” you’re probably thinking of, and it’s essential to confirm the exact source.
You can ask for clarity on the source of the funds in the contract, ensuring the buyer provides a breakdown, for example:

Are the funds coming from a personal account or a loan?
If a HELOC is involved, is it secured by the buyer’s current property?
3. Contract Clauses
In your purchase contract, you can include a provision that requires the buyer to provide evidence of their cash or financing source before closing.
Specifically, you may include wording such as:

"The buyer shall provide proof of funds sufficient to cover the purchase price within [X] days of contract acceptance."
"The buyer shall provide a written confirmation from their bank or financial institution that verifies the funds are readily available for the purchase."
4. Request Additional Documentation
Letter of Credit: If the buyer is using a line of credit or loan, you can request a letter from their financial institution indicating the amount of available credit.
Affidavit of No Financing Contingencies: If the buyer is claiming the funds are cash, but you suspect they are using a credit line or other financing, you could request an affidavit confirming that no additional financing will be required.
5. Inspect the Settlement Statement or Closing Disclosure
At the time of closing, you will see the final settlement statement, which will show where the funds are coming from, including whether the buyer used a line of credit or other financing.
If a buyer claims cash, yet the settlement statement indicates a loan or HELOC, this could indicate that the buyer’s claim was inaccurate or misleading.
What You Can Legally Ask For:
Proof of Funds (as described above).
Clarification of the Source of Funds in writing, which includes a breakdown of where the funds are coming from.
Affidavit or Representation from the Buyer regarding the nature of the funds (i.e., whether it is truly cash or sourced from a loan).
Right to Verify: You can add a clause in your contract allowing you to verify the buyer’s claim to cash funds.
Conclusion:
It’s entirely within your rights to request proof that the buyer has access to actual cash or liquid assets for the transaction, and it’s important to be diligent about verifying this to avoid misunderstandings or potential delays. Always ensure you have clear, written evidence and documentation confirming that the buyer has the necessary funds in place.