Help please! I'm buying foreclosure with no access to property!

14 Replies

Hello, its my first post here and need some advice from you amazing experts! I just won the bid at a foreclosure auction and submitted my $5,000 deposit and signed the foreclosure sale agreement and we are closing in 30 days. The issue is the bank (Chase) and their attorney has expressly forbidden me from accessing the property (It's locked up even if I wanted to) until deed is transferred. The big issue is i'm financing and need access to the property for appraisal, title V inspection for septic system and smoke detector inspection. Even if I was paying cash would still need the smoke detector inspection as it's state law to have them inspected BEFORE the sale. I don't care about home inspection, I'm willing to take my chances as I know the house well and the area well.  How am I supposed to do any of this required stuff without access to the property?? Extremely frustrated and in need of some advice..someone must have experienced this before and has a solution? Thank you.

What city/state are you in? Local laws can vary greatly. I’ve only done 2 auction deals and had to sign all that away. Mine were all cash so no appraisal was involved.

Well, you’ve got a problem. Assuming this was at the actual foreclosure auction, not a REO auction, the bank doesn’t own it and can’t grant you access.

I guess my question is in Massachusetts foreclosure auctions happen day after day...what do others do? I've asked an attorney, buy hoping to come across a local investor that has experience with this type of situation. 

You have made a common mistake - trying to finance an auction purchase. It is usually not practical in part because of what you bring up but also the amount of time it can take to get financing can be longer than the time to close. 

I am not an attorney. I am not suggesting you do this. i am just putting out some thing to think about. 

If the house is not vacant, knock on the door and offer the occupants money to come in and inspect. Alternatively find the previous owner and try to get  permission to access from them. 

Presuming this is a vacant house and it was a foreclosure auction, stretching the rules may be required. It could be argued that since it is vacant no one has possession. Also you have an equitable interest via your contract so perhaps you can take possession.

To @Wayne Brooks   brooks point if the bank doesn't own it, On what grounds can they forbid you access. It probably is breaking and entering but if it is not their property they have no say in the  matter. 

Regarding the smoke detector, the may be an exception for foreclosure properties since you don't/can't have access. you could make the argument to the bank they must give you access to inspect the smoke detector and do inspections at the same time. how can they give you access if they don't own it? The loan documents give them the right to enter and secure the property when it is abandoned

Have you considered a hard money lender? How about credit cards and friends?

Most of what I mentioned are questionable tactics. You may have to come up with another idea on your own. I know this, there is always a way to get it done. You have to persist until you find it.

@Jason Terrell

The foreclosing institution can pass the responsibility for title V compliance to the buyer and you will be responsible for compliance AFTER conveyance.   Your lender, if they choose to fund without a Title V inspection, will typically require that you escrow sufficient funds to cover replacement of the septic system, should it fail inspection.  So you're looking at putting up some serious dough in addition to your down payment and closing costs.

Well, at least it's vacant. I am a MA hard money lender, and we won't close on a foreclosure auction property unless we have access to see the interior. So unless you have a HML who will do that, you'll have a problem with financing. It's the first question I ask when called about financing a foreclosed auction property. I have funded plenty of rehab properties without smoke inspections and without title V, however, so clearly that is possible. A conventional lender won't do it, though.

Originally posted by @Ann Bellamy :

Well, at least it's vacant. I am a MA hard money lender, and we won't close on a foreclosure auction property unless we have access to see the interior. So unless you have a HML who will do that, you'll have a problem with financing. It's the first question I ask when called about financing a foreclosed auction property. I have funded plenty of rehab properties without smoke inspections and without title V, however, so clearly that is possible. A conventional lender won't do it, though.

Hi Ann, nice to meet you. I do have access to the property via lockbox code... all the investors knew it and they told me because they said this Bank's management company uses the same code for every house. So as the gentleman above posted I could definitely get in there and do my inspections and get out and challenge anyone who says I can't do that but that may be a last resort I'd rather get in touch with the management company or someone but that may prove difficult. Also I suppose my lender would ask how we were able to obtain the inspections and so would the seller's attorney maybe they just wouldn't care because they want to close the deal I don't know. 

@Jason Terrell
I’m not saying I’ve done it in the past on two occasions but on those occasions I definitely didn’t get my realtor to show me the property then unlock a window on ground floor without them noticing. Of course I didn’t come back later and go through said window to unlock the doors and let in all the people who needed in so I could have repair and inspections done. I didn’t do these things but if I did, did the realtor or any bank ask how these things like carpet, paint, and appliances were magically fixed or replaced? Nope Do I happily own these properties that I did not do these things to acquire? Yes :)

Originally posted by @Dain Boelter :

Jason Terrell
I’m not saying I’ve done it in the past on two occasions but on those occasions I definitely didn’t get my realtor to show me the property then unlock a window on ground floor without them noticing. Of course I didn’t come back later and go through said window to unlock the doors and let in all the people who needed in so I could have repair and inspections done. I didn’t do these things but if I did, did the realtor or any bank ask how these things like carpet, paint, and appliances were magically fixed or replaced? Nope Do I happily own these properties that I did not do these things to acquire? Yes :)

I'm so happy you didn't do all of those things lol

Jason, I am also a hard money lender in Mass and RI and have funded and do fund properties without being able to get in all of the time.  That is usually set aside for seasoned investors and or VERY strong deals but there are exceptions to ever rule.  What city / town are you in?  The fact that you have a lockbox code is huge and I would definilty enter and check things out to the best of your ability.  When you buy auction properties you are subject to all liens, taxes, outstanding utility bills etc, and the bank (seller) does not have to let you in for inspections, even smoke inspections.  In situations like this our borrowers often have to waive smoke inspetions, title V's and any other inspection.  If the deal is good enough we will fund it.  If you would like to discuss in more detail please colleague request me or send me a private message.  I'd be happy to look at this deal for you and tell you my feedback.  Be caerful do due as much dilligence as you can with auction properties. We have bought a ton of them, and funded just as many, and go to auctions regularly but it is definitely a nich / specialized market and you have to know your stuff!  Good luck!  

@Dain Boelter , Hmmm...and I have not accidentally noticed the lock box code over the realtor's shoulder or checked the lock box code when they were in another room and then gone back later, not with my GC, to check out the property. It's also amazing how unsecured some of these properties are, we can go look at a property and I'll go into the backyard and my husband jokes that he half expects me to come walking out the front door...unlocked bulkhead doors, windows, back doors, etc. Legally, however, I have signed a hold harmless for things like smoke detectors, well testing, other stuff that someone wanted done first that could not be done until after closing.