Dear Michael: On an REO sale who is responsible for all the unpaid HOA that the foreclosed owner has not paid. Is it the lender who now owns and is selling the unit or the HOA who?
Answer: REO (Real Estate Owned) is a class of property owned by a lender typically a bank, government agency, or government loan insurer, after an unsuccessful sale at a foreclosure auction. As soon as the lender repossesses the property it is listed on their books as REO and categorized as an asset (non-performing). The HOA must soak up monetary loss on anything pre-foreclosure, but once the lender repossesses the property it then becomes the REO’s responsibility for all current dues. Keep in mind that the first trust deed is in favor of the lender. The financial institution that holds the mortgage is the first to get paid if there should be any monetary amount left over from the sale. Unfortunately this is rarely the case as foreclosures usually happen when the mortgage note exceeds value.
Dear Michael: I was in escrow on a home when I found out trough my home inspection that there is a serious structural problem. I am still within my contingency period. If I decide to cancel can the seller refuse to sign the release of earnest deposit? And if they did what will happen to my deposit?
Answer: If the seller refuses to sign cancellation instructions and the buyer is within the contingency period then the seller can legally be at fault. You will both need to sign cancellation instructions to release your deposit. If you have a Realtor representing you he/she will make the upmost effort to have the seller sign the release form in a timely manner. The last thing the seller wants is to have their homes tied-up in escrow with a buyer that does not plan on purchasing it. It is not to the seller’s advantage to procrastinate signing the release form. The seller will want to put their house back on the market as quickly as possible so he/she can work on getting the next buyer. If a seller refuses to release the deposit then it would signify mediation and possible arbitration of dispute. For the duration of the time it takes to resolve any discrepancies between buyer and seller, the seller cannot sell the home to anyone until the dispute has been resolved. It is crucial for a buyer to satisfy themselves with the properties condition before removing the inspection contingency.
Dear Michael: We did our home inspection and want request the seller credit us for repairs. How can we find out what the total cost of repairs? We want to ask for a credit before the close of escrow?
Answer: Per the CAR (California Association of Realtor) purchase agreement you have a total of 17 days to complete all your investigation of property condition. During these 17 days you can take as much time needed to have all of your specialized (structural, mold, sewer line etc…) inspections completed to satisfy you. Once you receive your reports make sure to read them attentively. Be fair with the seller when asking for a credit, this is not a time for negotiating the price of the house, that task has already been completed. If you cannot determine the exact cost for repairs, consult with a contractor or go online and do some research. When submitting your request for repairs you can either ask the seller to repair the defective items, or you can ask for a credit in the amount that it will cost to repair. This amount is usually applied towards your non-recurring closing costs. The seller has a few options in the method to respond to your request: he/she can say no to all, agree to partial credit and repair, or say yes to all.
Michael Kayem is a Realtor with Re/max /Execs serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or e-mail them to him at: homes@agentmichael.com