what are POS violations and who are responsible to pay for them?

Asked by Glenn Kay, Cleveland Heights, OH Fri Sep 21, 2012

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This question is about this property: http://www.trulia.com/property/3091670053-3571-Bainbridge-Rd…

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Tari Torch S…, Agent, Woodmere, OH
Fri Sep 21, 2012
POS violations are violations found during a Point-of-Sale inspection done by the city when someone moves. It is a requirement that, when a home goes on the market, the seller must pay a fee, and schedule a POS with the city. City comes out and goes through the house to make sure the home is free of any serious issues, i.e., electrical, roof, mechanical, etc. Usually geared toward health and safety issues. This inspection, by the way, is NOT meant to be in place of a private home inspection by a buyer. In most cases, the seller repairs all the violations, city returns to re-inspect and then issues a Letter of Compliance, which the lender must have in order to transfer title on the sold house. Many times, the seller cannot or will not repair the violations, in which case they ask that the "buyer assume all violations." Then, a buyer would want to get a contractor to estimate the cost of repairs so that they could negotiate that figure into the price of the house. Bank-owned houses that have violations, or foreclosed homes, etc., are sold "as is"....banks rarely, if ever, do any of the violations. If buyer assumes the violations, the city will usually require 1.5 times the amount of the cost of the violations to be placed in an escrow account until those violations are completed.

This is how most communities that have POS inspections keep their housing stock free of major problems, especially in the older communities, such as ClevelandHeights, Shaker Heights, University Heights, etc. There are 16 POS communities in Cuyahoga County. So, your question, "Who pays for them" is really a matter of decision, usually the seller's decision. If you do not want to do violations, you can certainly request that the seller do them, but if seller won't, or can't, then you would probably not want to look at homes that have this issue.

Hope this helps.
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I understand the purpose of POS inspections, and I actually think it's pretty great. But I'm confused. How do you pay to fix the violations if the money to fix is held in an escrow account until after the violations are fixed? Do you need to actually have double the assets required to fix violations or is it assumed that you will be doing so on credit, to be paid down once the reimbursement is received? Do lenders have a special rider for these escrow accounts?

Thanks,
Marc
Flag Mon Apr 3, 2017
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