Escrow
We are in escrow for a REO house. We need to install a water heater, furnace, and appliances per the lender. The bank refuses to do the repairs, so we have agreed to do them, but we would like assurance that if something goes wrong we will be reimbursed for the cost of the repairs. The agent is asking us to sign a ”hold harmless” contract saying that we are liable for everything, and if the deal doesn’t go through, we will be not reimbursed. all repairs we make will be property of the bank. What can we do/ say to protect ourselves?
Re: Escrow
I assume that the purchase contract contains much of the standard language included in REO sales, including the fact that the property is being sold As-Is? If so, you entered into a contract to buy a property that may not be capable of financing traditionally. As such, your options are to seek out alternative financing which will not require these repairs, to cancel the deal, or to take the risk. I would not suggest the later, however, the bank is truly in charge in these cases, and if you don’t agree to accept their terms for modifying the deal you have already accepted, then your only remedy is to cancel. There really is no way to protect yourself if the bank is not willing to accept that as a condition – and, by the way, most banks will not accept what you are requesting.
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David Gibbs
The Gibbs Law Firm, APC
110 E Avenida Palizada, Ste 201
San Clemente, CA 92672-3956
Re: Escrow
I would say the best, perhaps the only, way to “protect” yourselves is to make sure (to the extent possible) that the deal is going to go through. Recognize that in gambling for the rewards of buying distressed property on “non-standard” terms, you are necessarily accepting certain risks, costs and inconveniences that don’t usually accompany mainstream market real-property transactions. For example, if there is a 30% probability that you’re going to “eat” $7,500 in repairs to get financing, think of this as a reason why the price is (maybe) $40,000 or so lower than it would be in good condition and not an REO.
Bryan Whipple
Bryan R. R. Whipple, Attorney at Law
P O Box 318
Tomales, CA 94971-0318
Re: Escrow
You’re buying an ‘as is’ property, just like a private party used car. There are no warranties or safety nets in such risky transactions. Investigate and inspect before you buy.
Terry A. Nelson
Nelson & Lawless
18685 Main St., #175
Huntington Beach, CA 92648