Home Buying in 90063>Question Details

Cheese, Home Buyer in 90063

Conventional loan, trust sale now lender wants repairs done b4 closing with an Escrow Holdback account. Is that legal, ethical?

Asked by Cheese, 90063 Wed Mar 30, 2011

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Roof issues can be construed as potential "Safety" as well as "Health" related. As a 30 year general contractor, developer, broker I would say that the lender has the right to exercise on the side of caution.
0 votes Thank Flag Link Wed Mar 30, 2011
Thank you all.
The property in question has no problems but the stand alone garage roof has a few tiny holes in the roof. The appraiser called this a health hazard. Thus the lender required the Escrow Holdback account.

How a garage with some miner roof leaks in southern California is a health hazard is beyond me.
0 votes Thank Flag Link Wed Mar 30, 2011
This is not unusual. The holdbacks are usually done for basic problems such as no or unacceptable flooring, foundation problem, or a bad roof that came up on the inspection report or as noted by the appraiser.
As far as I know it is perfectly legal for the lender to specify what repairs need to be done in order for them to feel OK with commiting the funds to close. I am not endorsing the practise and I am not an attorney but as a Realtor I have seen it done several times over the years. If the trust is eager to make the sale they will facilitate the conditions the lender is asking of the buyer. The escrow holdback guarantees the reimbursement for the actual cost of the repairs and that the repairs will be completed. Without knowing the state I cannot address the legality and as for the ethics of it--those with the money-- make the rules. All you can do is try another lender if the condition is unacceptable to you.
0 votes Thank Flag Link Wed Mar 30, 2011
Lenders can require that a home meet certain safety and habitability standards before approving a mortgage. Having repairs completed before closing is often required as it is the only way lender can guarantee that the repairs are actually done.
0 votes Thank Flag Link Wed Mar 30, 2011
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