Home Selling in 94541>Question Details

Themissusd, Home Seller in 94541

If roof rot and non-permitted work weren't disclosed in sale of home, what can we do? Trying to sell same home.

Asked by Themissusd, 94541 Tue Oct 5, 2010

We purchased a bank owned property in March 2009 and didn't receive disclosures about roof fungus and work done to the home without a permit.

Now we are trying to sell the home (due to a military ordered move) and would like to know what, if any, recourse we have from when we bought the home and what the best option for getting the house sold NOW we have. We MUST be out of the home by Dec 31, 2010.

It's a 2600 sq. ft. fixer upper/investment property that can be SFR or duplex with an additional detached studio guest home on a 7500 sq.ft. lot We currently owe $7K less than our purchase price. We don't mind not making a profit but would like break even and hopefully avoid a short sale if possible.

The property has tons of potential but also needs a fair amount of work to be in prime condition.

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Answers

8
Hello,

I am sorry but these are the risks you face when buying bank owned properties. While you may not have much recourse, I would still contact the Department of Real Estate legal hotline, it won't cost you a penny!
The number is 213-739-8282.

When selling, all you need to do is disclose EVERYTHING you know about the property. I wish you didn't have to sell at this time but if you must, this is the way to go about it. Please make sure you are working with a knowledgble agent. We are all here to assist you.

Kamal Randhawa
Broker
510-932-1066
1 vote Thank Flag Link Wed Oct 6, 2010
I'm curious. How did you receive financing with non-permitted improvements?
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Wed Oct 6, 2010
Themmissusd

Sorry you're facing some challenges.

When you bought the foreclosed property from the bank, more than likely you received documents stating that the bank has no knowledge of the property, its history and condition and was therefore exempt from completing the disclosures.

You would also have received the buyer's advisory telling you what your rights are, including your rights to do your own inspection that includes researching the permit history if that is research you wanted to undertake.

But if you had waived the inspection(s) or chose not to search the permit history, you may have limited recourse.

Since you now know the condition of the property, and if you have inspections that were done recently, you should include these as part of your own disclosure package when you sell the house.

Please make sure you engage a realtor who is well versed with short sales to guide you through this process if this is the route you choose to take.

Good luck!
0 votes Thank Flag Link Tue Oct 5, 2010
Themissusd,
What you are asking would be better put to an attorney familiar with real estate transactions because it poses the classic formula "what are the rights and liabilities of the parties." Although I am both a Realtor and an attorney I do not want to answer your specific question for several reasons including because a public forum is an inappropriate place to give legal advice.
Having said that, in general REO sales are "as is" in the broadest meaning of the words. The REO seller has never seen or lived in the property, has limited knowledge of it, and limited obligations to make disclosures. The buyer is usually given an opportunity to have inspections, and should do that. When the inspections are done the buyer should either walk away or attempt to negotiate some concession from the seller. The chances of recourse against the seller in these situations would be typically slim and none. However, if a abuyer did have inspections and their inspector missed them, then there might be some potential claim against that service provider.
In your current role as sellers you have the duty to fully disclose because you have actual knowledge of the problems. Whatever you do, do not cut corners on your disclosures. It could ultimately put you in far worse situation. Yes, you can also sell the property "as is" but you have a greater obligation and more knowledge than an REO seller.
Good luck with your sale and, as a veteran myself, I salute and thank you for your service to our country.

ARTHUR G. WHITE, SRES, LL.B.
Sales Manager Red Oak Realty
Broker Associate and Realtor®
Cal. DRE Lic. #01273793
http://www.artwhite.com
0 votes Thank Flag Link Tue Oct 5, 2010
When you buy a foreclosure property, you are buying it as is with no warranties or disclosures. Did you get inspections when you bought it? You inspection reports should have told you about the dry rot and termite damage plus the property inspection and roof report would have told you of any other issues with the house.

When you sell the home, you need to give the new buyer all the inspection reports that you got when you bought the home. Plus you will need to complet all the required disclosures in a regular real estate transaction.

Have you already listed the house? Make sure you get an agent who knows the area and can represent you well.

If I can be of any help, I can be reached at 510-279-9580.

Meena Gujral
Help-U-Sell Achievers Realty
510-279-9580
http://www.helpusellachievers.com
0 votes Thank Flag Link Tue Oct 5, 2010
If you know about the rot and if you know about the unpermitted status, you must disclose these issues. I'm not an attorney but I can tell you that when you bought the property, you may very well have been given disclosures of what the bank knew about the property. The buyer on top of receiving disclosures or lack thereof must ALWAYS have inspections done. Disclose what you know and price it accordingly!
0 votes Thank Flag Link Tue Oct 5, 2010
Themissusd,

Hi. This can be a tough one. With bank owned properties the seller (the bank) will have limited information about the condition of the property because they did not live on the property. Typical disclosures that a seller living at a property would be required to disclose, are exempt for the banks.

When you purchased the property do you remember signing the bank addendum? Do you have access to the paperwork from the time you purchased the property? Unfortunately the banks are pretty good at covering their bases in these bank addendum's and typically put verbiage in them that indicates they they are not liable for information they did not know about the property.

Did you have a home inspection when you purchased the property? This is always a good idea so you have a good understanding about the current condition of the property and potential areas that need to be repaired or will need repair in the near future.

You should have also been provided and singed an REO Advisory that goes over some of the disclosures that the banks are exempt from as well as what the banks are required by law to provide. Unfortunately the banks put a lot of responsibility on the buyers to complete all inspections and investigations about the condition and the permit history of the property. Again since the bank never lived at the property they would not know about the condition or if work was completed without permits. If the bedroom and bathroom count are different than on the tax records, this is a good indicator that work was probably done without permits.

When selling your home I would highly recommend that you disclose as much as you know about the property. This will really help you to find an well informed buyer who understands that the list price reflects the current condition of the property. This helps to mitigate some issues that can come up during the escrow process.

Sorry you are having to deal with issues you uncovered after the sale. This is never a fun thing to deal with.

If you would like some more detailed information and some ideas of strategies on how to best sell your home, please contact me.

Hope this helps!

Lisa Cartolano
Alain Pinel Realtors
0 votes Thank Flag Link Tue Oct 5, 2010
If this was a regular transaction, you would first have to prove that the seller knew about the roof fungus and un-permitted work and intentionally did not disclose this information. This was a bank owned property so the seller has no liability. You should have done a roof inspection, termite inspection and general home inspection when you purchased the house. If you did not, then the liability is with you. If you did, then the liability is with the roof or other inspector that failed to catch the damage. But, you have to prove the damage existed at the time of purchase in order to then find the inspector at fault.

When you provide disclosures for the prospective buyer, you must disclose both issues since you are aware of them. Your Realtor will be able to help you correctly disclose the information. If you are $7k below what is owed and you have to pay another 7% to sell the property (commission plus transaction costs depending on the city/county) if you do not have cash on hand, then you will need to short sell.
0 votes Thank Flag Link Tue Oct 5, 2010
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