As the other answers note, they're trying to block you from flipping the house.

I'm not a lawyer, so this isn't legal advice. But, sure, there are plenty of ways around it, though, frankly, 3 months isn't an eternity.

Here are two strategies:

Form an LLC (limited liability corporation). Transfer ownership of the property from you to your LLC. Then sell the LLC.

Or, similar, form a land trust. Transfer ownership of the property from you to your land trust. (That doesn't trigger the due on sale clause, per Garn St. Germain.) Then sell the beneficial interest in the land trust.

Hope that helps.

Fri Jun 6 2008, 09:10

I have seen this. They are putting a deed restriction on it saying you can't sell for 3 months. I didn't see it as a problem because realisticly it probably won't be sold in 3 months anyway. Even if you rehab it and put it right back on the market, it is unlikely that you will actually pass title to someone else within 90 days. They are trying to deter true "flipping' which refers to investors that don't even do anything to a property and just re-sell a property right away which drives up prices. There is nothing wrong with investing and selling for a profit, but they are taking precautionary measures to avoid things like flipping. Any seller can deed restrict a property with pretty much any restriction, so I think you have to agree to it, or not buy the property. Again, if you get the property back on the market even right after you buy it, and do find a buyer that fast, you could always delay your closing until after the 90 days is up. Good luck!

Fri Jun 6 2008, 05:23

They are trying to stop investers from buying, thats all!

Thu Jun 5 2008, 20:25

Dale when you say "the bank" are you referring to the bank you are buying the home from? Or the bank who is doing your financing? I have not seen any REO bank say you can not sell with in a certain amount of time. However, it could be the type of financing you are getting. You may have a pre payment penalty on your loan, you may have a certain type of grant or in Michigan a MCC loan. This just means it will cost you some extra money to sell.

You should check with your mortgage rep/ bank or if you have an agent, have them explain exactly what they are talking about.

Cindy Knight
Realty Executives e-Group

Wed May 14 2008, 10:11

Hi Dale:

First, how did you find out about the REO property? Was it listed? If it was listed and they are telling you it can't be sold for 3 months ... that doesn't sound right.

If you found the property through some other means, such as public records or RealtyTrac.com, it's possible the bank started the foreclosure process, but Michigan law states that current owners have 6 months to redeem the property if they can as long as it's not abandoned. So, basically, they have to pay their loan to bank in full to "redeem" it. Maybe this is why you're getting this information? Banks cannot sell out from under current owners during this redemption period.

I'd be happy to reaserch it for you if you're not already working with a Realtor.

Best of luck,
Lisa Bender

Wed May 14 2008, 09:54

Dale, I'm not an expert, but I would like you to think of this from the banks position. At one time speculators drove up the price of homes and now we are having a housing "crisis". I've seen many ways around this, but cannot recommend any.

I suggest joining a local Real Estate Investment Association. They may have some suggestions.

Wed May 14 2008, 09:27