Home Buying in Neptune>Question Details

Ms. Bradley, Home Buyer in Neptune, NJ

Can I back out of a short sale if I will not have the Certificate Of Occupancy on or before the closing date(as stated in the contract)?

Asked by Ms. Bradley, Neptune, NJ Sun Jan 30, 2011

I live in New Jersey I am in the final stretch of purchase a short sale. The process started in Sept 2010. A few issues have come to light as of last week. The CO was denied due to a few minor issues-no chimney certification and electrical outlet needing to be fixed. I am due to close on February 2, 2011 because that is when my approval period ends. I do not want to close without the CO. Am I able to back out of the deal? Am I guaranteed my earnest deposit?

Thank You

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Call your attorney. Some towns allow for a temporary CO to be issues with a specific time frame for the problems to be corrected. Your attorney can help you make sure the bank will allow you to close with the temporary CO.
As far as who pays for the repairs, since we don't know what's in your contract, again ask your attorney to clarify.
If the repairs are minor and and you truly want the house, but the seller honestly cannot afford the repairs, there should be a way to compromise on that, and work it out.
1 vote Thank Flag Link Mon Jan 31, 2011
"Now they are an issue to obtain the CO and the seller IS responsible for obtaining it. I am not willing to pay for these items to be corrected. My lender informed me that if closing wasnt perfromed by 2/2/11 then the process would start all over again, ie: new appraisals etc. I have been told I can sign the closing papers without the CO but I cannot occupy until I receive the CO. I really dont want to do this."

Ditto to what Gina stated.

A short sale usually is an "as-is" transaction and would have been stated as such in the listing. The sjort sale happens as the seller can not pay the mortgage and the bank takes a loss on the property. I you state that the seller "is" responsible.. but from experience with these types of sales, the seller probably does not have the money to make the corrections and it is most common that the buyer is to get the CO.

Are you getting a good deal? Is it worth it to back out of the purchase over getting the CO for what reads to be a few minor issues? When buying a short sale property or foreclosure, your agent or someone should have explained to you that these situations will arise. If these minor infractions are blocking you from buying the house.. did you really want to buy it?
1 vote Thank Flag Link Sun Jan 30, 2011
One more thing . . . besides the C/O costs I'd also include your additional housing costs during the period of time that you can't occupy the property in all 4 scenarios.
0 votes Thank Flag Link Mon Jan 31, 2011
Everything is governed by the executed sales agreement you signed. Confer all your questions to buyers agent representing you .

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Mon Jan 31, 2011
Mary, that idea of obtaining a temporary C/O is cool. Although I knew that people could obtain them in some areas, I didn't realize that one could obtain them in NJ.

Ms Bradley, you mentioned that it's in your contract that the seller would handle getting the C/O. Following are a few ways that you could do this without having the seller to put any extra cash into the deal: 1) get the seller (and the seller's lender) to lower the purchase price by the amount of the C/O costs, 2) get the seller to take a note for the C/O costs, 3) ask the seller's attorney to take a note for his/her fees (provided the C/O costs don't exceed the remainder of his/her fees that are due at closing), or 4) ask the seller's attorney to privately finance the C/O costs for his/her seller. IMHO, the second option is your best option.
0 votes Thank Flag Link Mon Jan 31, 2011
Thank You. No I'm not going to repair the items. The sellers attorney clearly stated that the sellers would be responsible for getting the CO and fixing any issues relating to it. SO unless I state otherwise the process wil start all over after February 2?

I will contact my attorney tomorrow.
0 votes Thank Flag Link Sun Jan 30, 2011
Ms. Bradley,

Thanks for the update and answering our questions. Typically when you buy a short sale, the house is as is and is usually stated in the listing that the buyer is responsible for the CO, repairs, open permits, etc. -- in essence, truly buying the house as is. The seller's upside down and they are not going to put a penny into the house in order to get it sold. If you were aware from the beginning that you would be responsible for all repairs, once the inspection was completed and these issues arose, you probably should've backed out then or at least if your contract, allowed you to. If you truly are not going to repair the items to get the CO then contact your attorney tomorrow (assuming you have one?). As far as the Feb 2nd date, "the process would start all over again", automatically?

- Gina
0 votes Thank Flag Link Sun Jan 30, 2011
Thanks so much for the propmt and informative responses.
More info:

Yes the inspection was performed and these issues arouse back in October. The sellers refused to fix them as they didnt have any money to put into it. Now they are an issue to obtain the CO and the seller IS responsible for obtaining it. I am not willing to pay for these items to be corrected. My lender informed me that if closing wasnt perfromed by 2/2/11 then the process would start all over again, ie: new appraisals etc. I have been told I can sign the closing papers without the CO but I cannot occupy until I receive the CO. I really dont want to do this.

Ms. bradley
0 votes Thank Flag Link Sun Jan 30, 2011
Ms. Bradley,

You should consult your attorney regarding this as we do not know what your contract states, any addendums thereto, which may allow or disallow you to back out and still receive your earnest monies, etc. With that being said and not giving legal advice in this response, do you want to back out because of these two issues or because your approval is ending on February 2, 2011. Are you referring to your mortgage or the short sale approval issued by the bank is set to expire on Feb. 2? I'm thinking that if you wish to fix these to issues which you referred to as minor, you can probably get an extension to close on another date. Of course, this would have to be done through your attorney. I would call him or her first thing in the morning and discuss your options. On another note, you've been in this contract for 4 months, do you want to start over from the beginning? Call your lawyer.

By the way, the electrical issue should've been found during your inspection (if you had one).

Good luck,

Gina Chirico, Sales Associate
Lattimer Realty
973-575-6353 ex 17 office
973-715-1158 cell
Gina@GinaChiricoRealEstate.com
0 votes Thank Flag Link Sun Jan 30, 2011
Ms Bradley:

Short sales are predominantly "as is" in the truest sense of the word. Usually, you are buying a lot and a physical plant with no guarantees. As my predecessors say, your attorney should advicse.

Keith R.
0 votes Thank Flag Link Sun Jan 30, 2011
Consult with your attorney, he/she can best advise as it relates to your specific situation...
0 votes Thank Flag Link Sun Jan 30, 2011
Ms. Bradley -
Did you use a realtor and a real estate attorney? I am surprised that these issues went this long before becoming an issue. Did you get a home inspection? An electrical outlet is indeed minor and you can repair it for anywhere from $15 for the part to $175 for an electrician to install a new line from the panel.
The chimney could be a matter of the town requirement of a separate certification from a licensed contractor. Or, it may need repair, which could be minor, or a few thousand dollars. More info is needed.
The CO denial should state what is needed. If you truly want the house, these seem like normal hurdles that should not prevent you from closing. You likely will not be allowed to close without satisfying those issues.

JPSerino
lic. NJ home inspector of 18 yrs
0 votes Thank Flag Link Sun Jan 30, 2011
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