Need Advice for "As-is" purchase

4 Replies

So I made an offer on a 6 plex and we went under contract. It obviously your typical "as-is" sale from a bank so I expected to have to do all the paperwork and CO. But then I get a notice to vacant and demolish due to unsafe structure. Or vacant and pull permits and fix issues. So the bank being a bank they say its my problem. So I contact the Twp and come up with the solution that I (Meaning my renovation company) will fix the rotted beam(which is what was causing the structure to be unsafe) as long as the bank reimbursed me at closing for work done. So I draw up an estimate clearly stating "REPAIRS FOR VISIBLE DAMAGE ONLY" After approval the twp wants the soffit removed and architect opinion. My initial Estimate was for $2k to replace one beam and some fascia. Simple job nothing too big. Now the entire perimeter needs to be rebuilt because it was done horribly before. Ill attach some pictures so everyone can follow and get an image of what I'm saying. So I now go back to the attorney and tell him whats going on. I don't expect for the bank to incur all the cost of this repair but when I made the offer on the property is was a fully occupied 6 unit property with some visible repair work needed and a new septic needed. Since my offer I've found out about $20-30k in structural repairs needed, the tenants needed to vacant, there is 3 units occupied by sqautters who believe they have a legal lease from the old owner ( who lost the property to the bank through foreclosure). Now what seemed like a sure thing is turning into a ton of work.

What options do I have? At the end of the day I still want the property but If I have to now deal with all these extra issues I want some sort of compensation to ease the extra cost. What can I say to this attorney to get him to work with me on this issue.

You're dealing with an attorney on a REO.....odd. They may or not play ball...just point out to them that now since the city has issued a vacate and demolish order, if they don't sell to you they'll have to deal with it themselves or sell to some other buyer Fast, with th same "new" issues. Now again, that is what we consider to be logical....doesn't mean the bank will cooperate.

Thanks that exactly what I tried to do without saying it like that. I told them since the property has obviously changed. I guess ill put it just like that and see what they say. I guess I worded the question wrong. Since the property I made an offer on has now obviously changed does that give me any leverage to make those demands or be able to back out. I know I can go look over my contract but I'm basically asking if anyone has any experience on this type of thing. The contract is the usual iron clad in favor of the bank so they win no matter what. Thank you for your response but I'll just review my contract and State the obvious to the seller and see if the go for it.

@Justin Sullivan

No idea what state you are in. But everything comes down to the contract. For the damage that occurred after signing the contract, take a look at what your contract says about risk of loss. As a former banking lawyer, I've done my share of draconian contract writing. But even many "heartless" banks typically agreed to bear the risk of loss until the closing. 

Sometimes you can attack an "as is" sale by pointing out any specific requirements that the seller may have agreed to. 

Squatter/former tenant wise, not sure if you have a strong case. But again, it depends on what the contract says.

On a separate note, I would personally demolish that structure and not rebuild it. It's a terrible design and I can't imagine the amount of headache you will incur by trying to rebuild something like that. I can't imagine you getting it properly done for $20 to $30k.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.