Should you buy a foreclosure home? Well, homes that have been foreclosed upon are usually held by a bank. Well, you may want to buy it because the price is right; because with this real estate market, there’s a lot of bank-owned property. One of the problems with buying bank-owned property is the addendums they put on contracts. The contracts exclude the bank from any liability as far as the condition of the home, particularly if it had any particular latent or hidden defects. Of course, the big one is sinkholes.
You would need to do a very thorough job of having the property inspected to make sure it was not a prior sinkhole home. If it was, it’s almost impossible to get these engineer’s reports to determine whether or not it was repaired properly. And that will impair your ability to insure it, where if it was an unrepaired sinkhole home, you’re not going to be able to get insurance on the property, or you won’t have coverage even if you do. The insurance company may decline coverage. There’s any other number of other problems in buying these – physical problems with the property.
It would be to your benefit to hire an inspector to thoroughly inspect the property, make sure there are no sinkholes, make sure everything’s in working order –especially the roof– so you know what you’re buying and you don’t wind up buying a pig in a poke. You also need to look at the title and keep in mind that these contracts, or the addendums they put on bank-owned property, say that the bank can get out of the contract for any particular reason, and so it’s problematic. You don’t have absolute certainty, particularly if they discover that they’ve got some title problems. Well, they’ll say, “I’m sorry. I can’t close because we found that we didn’t do the foreclosure right,” or whatever, and they cancel your contract, which makes it very frustrating.
So, those are some of the pitfalls or things that you need to look out for if you’re going to buy foreclosed property, particularly from a bank, which is usually who you’re buying it from. The addendums are almost as long as the contract and they just exclude the bank from any liability as to any problems with the property, and you have no recourse. So, the advantages are that you usually get a super-good deal. The downside is, you’ve really got to do your homework and investigate the property, and also investigate the title to make sure they’re not going to back out at the last minute and that all the liens are cleared up.
Another big pitfall, particularly in this area, is unpaid utility bills. Many times, the utility company has a lien against the property, particularly in the Gulf Harbors, which was formerly Lindrick, or the Aloha district, which is now Florida Government Utility Association, and they will not give you utility service unless you pay the past-due utility bill. So, you need to look out for that. If you’re buying property in a Homeowners Association, you need to check and make sure that there are no past-due Homeowners Association dues or Condominium Association dues if you’re buying from a bank-owned or foreclosed property. If you’d like representation concerning a purchase of foreclosed property, give me a call at (727) 847-2288 and I’ll be happy to represent you. Thank you.