Purchasing house on demo list with a mortgage

Fort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes

I am currently negotiating a property that is on its way off the demo list. It was fully remodeled in 2020, but the city government is way behind. They are at the point of getting it inspected for final clearance, but don't have a timeline from the city. The seller is hoping to move to a larger project and wants to sell as is. We will be doing a DSCR loan, but my broker was unsure of what kinds of title issues we may have and whether we could close on it. Any advice appreciated.

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Jason WrayPro Member
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
4y
You are going to need a clean title with no issues for a DSCR loan. Even though it's Non/QM it still requires a clean chain of title free of any liens, judgments, 2nds, or tax burdens. Your loan officer should have already ran title and had it back by first week of processing have you reviewed?
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Alicia MarksPro Member
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Fort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes
4y
We are still finishing negotiations, so it hasn't gotten to the loan officer. If it is an issue than we want to jump straight to temporary owner finance until it's cleared.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
4y
Quote from @Alicia Marks:

We are still finishing negotiations, so it hasn't gotten to the loan officer. If it is an issue than we want to jump straight to temporary owner finance until it's cleared.

Are the title issues tied to the City? What are you using the property for (rental or flip). Reason I ask is you want to make sure if you do get owner financing that there are no encumbrances on the property that will not allow you its full use, whether it be the ability to resell it or rent it.
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Alicia MarksPro Member
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Fort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes
4y
Quote from @Chris Seveney:

Quote from @Alicia Marks:

We are still finishing negotiations, so it hasn't gotten to the loan officer. If it is an issue than we want to jump straight to temporary owner finance until it's cleared.

Are the title issues tied to the City? What are you using the property for (rental or flip). Reason I ask is you want to make sure if you do get owner financing that there are no encumbrances on the property that will not allow you its full use, whether it be the ability to resell it or rent it.

It's already been rehabbed and rented out. There's even a Section 8 tenant, so it had to pass Section 8 inspection before move in. The issue is the city is well behind on clearing properties off of their demo list because the permit office and code offices don't seem to relay information. The rehab finished in July of 2020 and they are still not off the list after almost 2 years of rent rolls. It's currently operating at the intended use. This seems to be simply a hurdle that is taking longer than most. I'm not even sure that there's a note on the title at this point, only that it is marked on the list with the city. I would guess that resale or taking a mortgage would be hindered without being cleared first.
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