Property with REAP - Undisclosed
A partner and I recently closed a purchase of a property in Los Angeles. In speaking with the tenants we found out that there was a REAP (Rent Escrow Account Program) on the property. Doing some research, I found out the particulars of the program, the most concerning is that tenants would be paying 50% of their rent and they have the option of paying the city rather than the owners. In essence, we would not be collecting any rent on the property until the REAP is lifted. Honestly, I am surprised that the bank didn't catch it.
The REAP was not formally disclosed to us in any of the disclosures, but it was on the preliminary title report.
I wanted to see if anyone has had a similar experience with non-disclosure or REAP properties to help me understand what my options are.
Thank you!