Trying to buy a FNMA foreclosure in Tampa. The Florida FNMA addendum to the contract has some strange verbiage. It is as follows:
Certificate of Occupancy: If the Property is located in a jurisdiction that requires a certificate of occupancy, smoke detector
certification, septic certification or any similar certification or permit (“Certificate of Occupancy”) or any form of improvement
or repair to the Property to obtain such Certificate of Occupancy necessary for the Property to be occupied, the Purchaser
understands that the Seller requires the Certificate of Occupancy to be obtained by the Purchaser at the Purchaser’s sole expense.
The Purchaser shall make application for all Certificates of Occupancy within ten (10) calendar days of the Acknowledgement
Date. The Purchaser shall not have the right to delay the closing due to the Purchaser’s failure or inability to obtain any required
Certificate of Occupancy. Failure of the Purchaser to obtain and furnish the Certificate of Occupancy shall be a material breach
of the Agreement.
I don't even know how to get my hands around this. Seems odd that the seller (FNMA) would require the buyer to get a CO. Can someone who has purchased a FNMA foreclosure help me understand why this is necessary and how I can determine what my risk is here?
I should have added that it is an existing 40 year old condo. There was some mold. FNMA removed a portion of the wall and remediated. The drywall was not replaced.
This is not uncommon. You are purchasing subject property AS IS. The Seller, FNMA, puts onto you, if any, the requirement to ensure the property can be occupied. In other words, the property not having a current CO is not grounds to vacate any contract between the two of you once entered.
First step is simply verify the property has a current CO. If the property has a standing CO, then you have nothing to do. If the propery's CO was suspended due to repairs or alike, then you carry the burden of curing the lack of CO.
FNMA will not do any of this in most cases in order to sell the property.
Certificates of Occupancy are issued by the building department. Call them to confirm if there is one for your unit.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing