I own a rental house in Independence Missouri. In late may there was a fire and the house is now damaged and vacant. I live in Oregon and have decided that I'd rather sell this damaged house as-is than try to get it repaired.

My insurance company paid out on the loss and issued two checks, one to me and another made out to me AND the City of Independence. The city requires this as a sort of security deposit to ensure that the house will be repaired and not left in a dangerous state of disrepair. The city will refund my money when the house is repaired to their satisfaction.

Since I want to sell the property now, as-is, i'll be dependent on the purchaser to repair the property so that the city is happy and I can get my money back from the city. This makes me uncomfortable because of the risk that the new owner does not get the property fixed and I don't get my money back. 

I've asked the buyer to pay me an extra $15,000 (the amount the city is holding) and we'd write a contract stating that i'd reimburse them when the city reimburses me. The buyers are (understandably) not enthused about that idea because of the risk that I might not pay them and also due to the additional up front cash requirement.

What other options are there? How can we structure this so that both I and the buyer can be comfortable?

Things I've considered are:

  1. Put a lien on the property. Because the lien would only be for $15,000 i've been advised by  a friend who is an attorney (though one used to dealing with far more expensive properties) that it wouldn't really make sense.
  2. Have an attorney write up a contract that places the deed in collection escrow until the city is satisfied and my funds are released, at which point the escrow company will release the deed to the buyers. This would cost a little money, but less (i'm told) than the lien, perhaps a couple thousand bucks.
  3. Roll the dice, sell the property and just hope that the buyer follows through on repairs in a timely way so i get my money back. This would be in everyone's interest, but still is a bit scary since it's completely out of my control. Not ideal.

What other advice and ideas do you fine and creative folks have?