HUD home we are purchasing has new roof leak

HUD home we are purchasing has new roof leak

Saginaw, MI · Member since 2014 · 1 post · 0 votes

Hi All -

I put a bid, and got an acceptance, on a HUD home back in August. Due to an inexperienced relator and unresponsive property management company, we only just now completed the inspection. When we reeneterd the home from our initial walk through and showing (when we decided to put an offer on it) there was not any evidence of a leaky roof, and the property condition report we recieved from HUD stated the roof was in good condition. When we entered now, a month later, to complete the inspection, there was water dripping from the ceiling in a small spot by the door. The paint is also bubbling and peeling in the spot as well.

Since this is a new property condition I am reading that we can put a damage report for the property. My contractor said the damage now, is negligible and should be under a grand to fix. I still want to proceed with the sale but I would like to property secured from continued damage now, before the leak gets worse. We don't close until early next month. Does anyone know what the chances are of us getting someone out there to fix it, or at least provide a temporary repair?
Also - we are getting FHA financing and have been assured by our lender that the small leak as it is now should not be a problem for our repair escrow, but if it continues it could be. Everything I am reading now says that leaky roofs are a no-no for FHA financing. I am conflicted on who to believe and how to proceed.

Any thoughts at all are very appreciated.

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Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
12y
Originally posted by @Clay Smith:

Option 2) Do it yourself. Just take a ladder with some form of roofing patch/mix/spray/caulk.   This is a good enough temporary fix.

That's terrible advice. You do not own the property and your HUD contract will clearly state that you are not allowed to any work on the property until you close on it. You will be in violation of the contract and they can cancel it and you will lose your EMD.

Are you an owner occupant buyer or an investor? If you're an owner occupant and your inspection uncovers issues that were not disclosed in the property condition report you can generally get out of the contract and have your EMD returned. Since the contact is from August I don't think this would be an option any more. If you're an investor you have no recourse on a HUD deal when it comes to inspections. HUD will not make any repairs once under contract but if there's an active leak they'd probably tarp it for you, I've had them board up broken windows before.

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  • Clay SmithBusiness Member
    Investor · Louisville, KY · Member since 2013 · 419 posts · 244 votes
    12y

    Option 1) go back to the unresponsive HUD Property Management contractor and ask them to tarp it.

    Option 2) Do it yourself. Just take a ladder with some form of roofing patch/mix/spray/caulk.   This is a good enough temporary fix.

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  • Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
    12y
    Originally posted by @Clay Smith:

    Option 2) Do it yourself. Just take a ladder with some form of roofing patch/mix/spray/caulk.   This is a good enough temporary fix.

    That's terrible advice. You do not own the property and your HUD contract will clearly state that you are not allowed to any work on the property until you close on it. You will be in violation of the contract and they can cancel it and you will lose your EMD.

    Are you an owner occupant buyer or an investor? If you're an owner occupant and your inspection uncovers issues that were not disclosed in the property condition report you can generally get out of the contract and have your EMD returned. Since the contact is from August I don't think this would be an option any more. If you're an investor you have no recourse on a HUD deal when it comes to inspections. HUD will not make any repairs once under contract but if there's an active leak they'd probably tarp it for you, I've had them board up broken windows before.

  • Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    12y

    Couple of things. I'd agree that you might not want to do any caulking or spray any foam on the property as that may indeed put you in a relatively gray area in terms of working on the property.

    That being said, I'd suggest letting hud know about the leak. And then I'd go put the tarp on the roof myself if I were you.

    Bottom line is that putting a tarp over a roof is not going to give HUD any cause for terminating a contract. You have not done anything that would become a permanent fixture to the house in any way.

    And its obvious the real issue here is not that you're looking to get out of the deal to get your EM. The concern appears to be that if the leak and/or cause of the leak continue to go unrepaired, a larger issue may develop that would cause your lender to back out of the financing.

    Sometimes, common sense has to take over. Putting a tarp on the roof is not an issue. It won't cause the asset manager any headache or additional cost by a contractor in terms of having to "fix the fix" that you put in place.  

    But it will likely give you the best shot at preventing the leak from getting worse as most asset managers tend to move a bit slow when it comes to maintenance updates on hud homes.....

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