RSS
Print This Post Print This Post

Bank Owned REO Property By Steven Greenberg

steven-greenberg

Representing A Buyer Purchasing A Bank Owned/REO Property

Part Two

By Steven R. Greenberg

This article is a continuation of last month’s article regarding areas of concern in an REO Counter-Offer Addendum typically used by banks in connection with the sale of a foreclosed (“Bank Owned” or “REO”) property.

Previously, it was pointed out that REO Counter-Offer Addendums may provide that the seller is only obligated to deliver insurable title, as opposed to marketable title. Some title companies hired by the REO sellers use this provision of the Counter-Offer Addendum to reject survey objections made by the buyer. It should be noted, however, that the only authorized form of a title insurance policy in the State of Florida is a marketability title policy. Accordingly, the title company cannot just insure over the survey defect thereby requiring the buyer to accept title with the survey defect. This issue typically arises in connection with the encroachment of the residence or some other structure into a platted or deed restriction setback or into a platted or deed restriction utility and drainage easement. Also, I am aware of at least one title company used by REO lenders who is not even reviewing the survey until after the closing, which results in a title exception for the encroachment being disclosed for the first time in the owner’s title policy delivered to the buyer after the closing. Therefore, the buyer has unknowingly purchased a “survey defect” which will arise when the buyer goes to sell the property. For the reasons described above, it is imperative that the buyer have a real estate attorney carefully review the survey and the title commitment prior to the closing and insist, on behalf of the buyer, that the title company remove all survey exceptions except those that the buyer is willing to accept.

Other points of concern in a typical REO Counter-Offer Addendum are as follows:

Many Counter-Offer Addendums give the seller the right, at the seller’s sole discretion, to terminate the Contract if, among other things, the seller has transferred and conveyed the property to a third party. While I have not experienced the termination of a Contract by an REO seller for this reason, the possibility exists and buyers should be advised as to this provision.

2. The REO seller is only obligated to turn over keys in its possession (which may be none). Garage door openers and mail box keys are excluded from the sale.

3. The buyer assumes the responsibility and liability for the refund of any security deposits to any tenants at the property. It is, therefore, critical that estoppel letters be obtained from tenants at the property in order to ascertain the status of rental payments and the existence of any advance rents or security deposits claimed by the tenants.

4. The buyer is not permitted to directly or indirectly cause any inspection to be made by any government building or zoning inspector or government employee without the written consent of the Seller. This is of particular concern when trying to confirm that permits have been obtained and closed out for all improvements on the property. Also, this provision is troublesome with respect to possible non-conforming improvements on the property.

The REO Counter-Offer Addendum supersedes almost every provision of the Contract submitted by the buyer. It is important that Realtors carefully review and understand the REO Counter-Offer Addendum. Furthermore, professional Realtors will have a real estate attorney review the Counter-Offer Addendum with the buyer to explain and advise the buyer of the provisions of this document as it affects the Contract offer that the buyer presented to the seller. Although some aspects of the Counter-Offer Addendum sound pretty scary, once I have explained the provisions, provided legal counsel, and confirmed that the buyer may be obtaining a property at a very good price, the buyers have invariably signed the Counter-Offer Addendum without hesitation.

Steven R. Greenberg has practiced Real Estate law in Sarasota since 1986 and is a shareholder in the law firm of Icard, Merrill, Cullis, Timm, Furen & Ginsburg, P.A. He is board certified by the Florida Bar in real property law and frequently lectures on matters involving real estate transactions. Steven may be reached at (941) 365-6216 or by calling Linda Witt, Director of Marketing, directly at (941) 586-4412 or by email at REinfo@icardmerrill.com.

Share

Tags:

Leave a Reply


Featured Properties

Ads

REAL HAPPENINGS

April 2, 2020 Ringling Underground

April 2, 2020 Ringling Underground

CANCELLED Ringling Underground CANCELLED. Enjoy live music, and art in the Museum of Art Courtya[...]
CleanSlate Property Services Opens

CleanSlate Property Services Opens

CleanSlate Property Services, a local concierge handyman business. My name is Tim White, former [...]
March 5, 2020 Ringling Underground

March 5, 2020 Ringling Underground

Ringling Underground Returns. Enjoy live music, and art in the Museum of Art Courtyard 8:00pm -1[...]
March 6, 2020 Gettel Toyota Grand Opening

March 6, 2020 Gettel Toyota Grand Opening

You're Invited To Gettel Toyota Of Bradenton's Grand Opening. On Friday, March 6th, from 12pm-2:[...]
March 12-13, 2020 Pop Up Art Show

March 12-13, 2020 Pop Up Art Show

Sarasota Architectural Salvage Hosts Event To Support Local Artists. For more information and/or[...]
February 6, 2020 Ringling Underground

February 6, 2020 Ringling Underground

Ringling Underground Returns. Enjoy live music, and art in the Museum of Art Courtyard 8:00pm -1[...]
January 25, 2020 Spoons And Tunes

January 25, 2020 Spoons And Tunes

TheWineToBuy.com Hosts Innovative Wine Tasting. Tired of the same old BS? Then join TheWineToBuy[...]
February 7, 2020 Thunder By The Bay Kick Off Party

February 7, 2020 Thunder By The Bay Kick Off Party

White Buffalo Saloon Hosts Born To Be Wild! Join REAL as we kick off 2020's Thunder by the Bay. [...]
Curb Appeal Detailing Opens New Sarasota Location

Curb Appeal Detailing Opens New Sarasota Location

Auto Enthusiasts Take Note. Curb Appeal Detailing announced the opening of their new location i[...]
January 11, 2020 National Hot Toddy Day

January 11, 2020 National Hot Toddy Day

How To Warm Up On A Chilly Day. Today is National Hot Toddy Day! A hot toddy is a delicious drin[...]
Anheuser-Busch Launches New Hard Seltzer

Anheuser-Busch Launches New Hard Seltzer

Bud Light Seltzer Arrives Just In Time For The Super Bowl! Anheuser-Busch is launching a new har[...]
Ocala Gains New Urgent Care Center

Ocala Gains New Urgent Care Center

StatMed Urgent Care Center Ocala Opens January 2, 2020. StatMed Urgent Care Center is a step abo[...]
New Year's Eve 2019-2020 Tow To Go

New Year's Eve 2019-2020 Tow To Go

Everyone Have A Safe New Year’s Eve Tonight! Tow to Go is a partnership between AAA & Budweiser.[...]
Wyze Labs Data Breach

Wyze Labs Data Breach

Multiple Data Breaches Exposes Information Of 2.4 Million Customers. Wyze Labs' low cost, inter[...]
Westbound SR 70 Southbound I75 Ramp To Close

Westbound SR 70 Southbound I75 Ramp To Close

8 Months of New Detours Loom Large! Starting at 11 p.m. Thursday, January 2nd, the westbound on-[...]
Wawa Data Breach

Wawa Data Breach

Wawa Facing Wave Of Lawsuits Over Data Breach. On December 10, Wawa's information security team [...]
December 26, 2019 Deck the Halls @ Ca' d'Zan

December 26, 2019 Deck the Halls @ Ca' d'Zan

Ca' d'Zan All Decked Out. On December 26th, from 5:00pm – 8:00pm join The Ringling for Deck the [...]
January 22, 2020 Ringling's Wisconsin Pullman Tour

January 22, 2020 Ringling's Wisconsin Pullman Tour

Private Tour of the Wisconsin Pullman Car. Join Jennifer Lemmer-Posey, Tibbals Curator of Circus [...]
Commercial Investment Division Changes Name

Commercial Investment Division Changes Name

RASM Commercial Division Now Know As Commercial Real Estate Alliance. The Realtor Association of[...]
December 3, 2019 GivingTuesday

December 3, 2019 GivingTuesday

Join the GivingTuesday Movement. GivingTuesday is a global generosity movement unleashing the po[...]
Translate »