(both links same article)
This article is pretty interesting for landlords. It has some interesting details to think about regarding leases and partnerships. It's based on NY state law, but is food for thought in all states.
1. Purchase/Sale Disputes: Just getting to the closing table is the purchaser's first challenge. While the real estate brokers may have promised that they negotiated a terrific deal where everyone agreed to the price, financing and deposit, what happens when the current owners have open building permits that require a Certificate of Occupancy and the town decides that the construction wasn't performed to code? Now, the town requires a variance to grant the Certificate of Occupancy, which may not be forthcoming. After the purchaser's lender declines the loan incident to this news, the purchaser wants the deposit back, but the sellers say "no way," arguing that they are complying with the contract of sale by way of making good faith efforts to get the Certificate of Occupancy. This results in litigation that can take several years to resolve. Beyond title defects (i.e., open permits), there can be other issues that prevent a closing from occurring, such as out-of-possession property lines, seller's non-ownership status, restrictive covenants preventing an intended use or just the efficient use of the property, existing liens against the real estate, current tenant issues with estoppel letters not being forthcoming--and many others. Prospective purchasers who are pound-smart rightfully know that spending their pennies on proper due diligence as soon as practicable can save real money when getting into the real estate game. Start with a title search, perform environmentals, review all current leases and perform a meet and greet with tenants, while always being sure to check with the Army Corps of Engineers when dealing with waterfront property. Only if everything checks out should you even consider being a purchaser.
See the link for the rest.
I think they left off personal injury claims, i.e. falls.
Originally posted by @Josh Russell :
... what happens when the current owners have open building permits that require a Certificate of Occupancy and the town decides that the construction wasn't performed to code? Now, the town requires a variance to grant the Certificate of Occupancy, which may not be forthcoming. ...
I guess things are simpler where I am. We can get a Conditional Certificate so that property can be transferred, with the condition being that the property cannot be occupied until all code issues have been corrected and all inspections are passed. At that point, you get your Certificate of Occupancy.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing