Doing Repairs Before Closing

12 Replies

Just put a bank owned property under contract (paying all cash) to close near the end of the month. I would like to go in and get it painted, fix some broken windows, and clean before closing. I will do everything else (roof, kitchen remodel, door locks) after closing. My thought is that I can get a tenant in by the 1st of the month, avoid taking off days at work, and have it "showable" before months end. Thoughts?

Nope, never going to happen. The bank will not allow that to happen and will kill your deal if they find you have touched the property. You don't own it you can't modify it and they don't want to be liable for anyone getting hurt, anything happening to the property or fixing anything that you started if you fail to close. You would be trespassing at this point.

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This happened with me on our last closing. Our property did not pass inspection so i had the seller sign a written contract saying that i could make renovations to the house before closing so i could get inspection passed. It worked out fine in this situation but it is risky and i could have lost all the sweat equity i put into the property if the deal fell apart. I know most people would advise against this, but sometimes when time is critical you have to push a little. In this case it was a PR and i needed a livable house on the closing date so thats what i did. When the sellers agent came to give me the keys she was not happy with what i did,but the deal was closed that day and i am sure she wanted her commission check.

I warned my buddy not to do this on an REO he was buying as an owner occupant property. He actually put in all new drywall to finish the basement before closing. The sump pump failed, drywall and basement got completely trashed, the closing never happened, and he was out big time $$$$$

As the others have said it is a very bad idea. I have seen one case where the seller allowed it and they make you sign a hold harmless agreement. If you do it without there knowledge it is trespassing and vandalism. If you do it on a HUD home or other government owned property it is a felony.

It's not our usual practice, but we have done this a couple of times with vendors - both times we put up a large ernest money and made a portion of it non-refundable - but these were exceptional circumstances.

We have not done this with a power-of-sale or bank-owned property, nor would I have any expectation they would allow it to occur.

While it sounds nice, do not do it without a written agreement. property owned by an institution will usually never agree to doing this. If the owner does agree keep in mind if the deal falls through all your sweat equity and materials are lost. Doing it without permission can be a reason to break the contract. If you make it look nice they may change their mind about the sale.

If written in contract(Private Seller), but risky.....Never try with a HUD..They continue to inspect properties up until closing...You will lose the deal..

I take pictures, get measurements and materials list to complete rehab...On closing day change locks first and ready to go!

Originally posted by @Rolanda Eldridge :
If written in contract(Private Seller), but risky.....Never try with a HUD..They continue to inspect properties up until closing...You will lose the deal..

I take pictures, get measurements and materials list to complete rehab...On closing day change locks first and ready to go!

I can speak to this. As a HUD inspector I can tell you that this is a bad way to go. I have taken out of the properties anything that I could get in my truck. I have taken landscaping materials building supplies light bulbs, thermostats. I have to put up no trespassing signs and also stop work notices.

I break back into the house and change out all the locks as they have to be HUD keys. It takes a long time to close on a HUD house.

If you don't want to lose all the work and materials on the property don't do anything.

Reviving thread because most responses are with regard to lending and liability risk, and... I'm in a bit of a catch 22 situation.

I'm in contract for a property I'm paying cash for. I've agreed to waive some exterior concrete work to come to agreement on a purchase price with seller completing several other repairs to the interior. I've also required the seller to provide occupancy permits for the property since it is fully tenanted. Here's the catch, borough inspections came back and said concrete stairs and concrete balconies need to be repaired before permits can be issued. I was expecting it to be simple patch work but it requires either capping stairs or replacing them fully which is a bit more than I was budgeting for.

I need the permits before I'm willing to close so I'm not stuck with a bunch of other unexpected cost to obtain occupancy permits and paying for repairs before closing is a bad idea based on previous posts and everyone else I spoken to. I've made a rookie mistake in accepting to do any repairs rather than negotiating price but what to do now? I think my options are:

1) to raise purchase price or deal with credits and have seller take care of all repair in order to get the occupancy permits. (not excited about this because the seller will not likely do quality repairs which defers maintenance to me)

2) add contract terms that require the seller to reimburse me for any paid repairs to the property if the deal falls apart for some reason. (seems like the better option but have never done anything like this before)

3) walk away due to inspection contingencies because repairs are over budget

I'd like to avoid too much discussion on option 3 although it may be the route to go primarily because it is an easy one and I'd like to explore options or negotiation ideas I hadn't though of yet. Thoughts?

Well, if occupancy permits are not required by the city/county for the sale, what’s the problem? You know what is lacking now....close on it, get the inspection and occupancy permit after you do the repairs.

Paying "All Cash" and you did the entire lawn and painted the outside of the house. Inside, you put in new floors and tore out the kitchen cabints along with installing a new toilet, vanity and sink all before COE. 

Good for you and it does not matter as far as the bank is concerned because you are paying Cash so not sure what that other guy was talking about. 

I sold a home to an investor and he said he wanted to remove the old porch and build a new porch before COE and I said, yes!nHe signed a waiver of liability and why not??? He also put down $40,000.00 with no inspection and that means the home is closing so he can add new doors, flooring and anything else he wants to do. Why not? 

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