I recently spoke with a potential seller who is in pre-foreclosure. The home was a Habitat for Humanity home and is 10+ years old. She is the owner of record.
When asked if she was aware of any back taxes, she mentioned not being anymore than a year because if she doesn't pay them, Habitat does.
Any body ever deal with a Habitat home? Anything I should be aware of/stay away from?
Thanks in advance!
What do you mean foreclosure?
HfH affiliates use restrictive deeds of trust, I know, I helped write them.
It's designed so that a homeowner receiving a home at a reduced market value can't throw it on the market and profit from the donations made in that property.
There is a waiting period, it varies, 5, 7, 10, 15 years before title can be transferred by that owner in a sale transaction. Limitations are often set as to encumbrances, allowing second mortgages drawing out the equity, as any foreclosure would simply be paying off a discounted loan, one made at a below market value, that too can circumvent the intent of the sale of the property. This all may vary from one affiliate to another, but as a non-profit, there are special considerations to deal with. This does not keep any tax authority from their actions.
First thing to check is the granting deed and see if any restrictions still apply. If not, and the homeowner has the right to sell at market value, then proceed.
If you're concern was from a marketing standpoint, being built as a low/mod income home, that doesn't need to be mentioned and, I'd put most any HfH stick built home up against any other in that price range as to quality of materials and workmanship, each building crew is closely supervised by those with experience, so it should be a sound build. :)
@Bill Gulley Thanks for the quick response. I took a look at the deed and there does not seem to be a waiting period mentioned. As far as restrictions with the deed, it states some general maintenance requirements (landscaping, removal of trees, nuisances, maintenance of the property, etc.) and only mentions that transfer restrictions comply with fair housing (not discriminate race, sex, etc.).
I say foreclosure because the current owner was served an NOS that will proceed in Jan of next year.
Again, am I missing something? Or anything else to be on the look out for?
How long has that owner been in title?
Check the Note, there may be a higher payoff with amounts forgiven over time (which is not subject to forgiveness of debt matters with the IRS).
Usually, after some probation period and protected period, placed in effect by the deed or note allows owners to convey, it would be odd if nothing was used as that was a concern long ago at the national level. So, someplace, there should have been some restrictive measure that evaporates after time.
You mean a tax sale?!
HfH rarely forecloses on clients, there are other ways for them to part ways.
One way to ensure everything is in the clear is call the HfH affiliate there who built the house and ask if the owner is now free to sell it, if she is, they will say so as she earned it! It's hers! BTW, you need a payoff from them if she still owes anything, there is no interest on that note (another exception under tax code) so the payoff will be easy to determine. :)
@Bill Gulley The owner has been in title for 13 years. I will contact the local affiliate and find out more info.
Thanks again for the info/help. I'll post again once I find out more.
My bet is that after 13 years, you won't have an issue, we set our repurchase agreements and terms to 5-7 years, varies. I do believe some agree to give rights of first refusal to a future sale, terms and conditions vary but are under biblical conditions of not charging interest, there are sweat equity requirements and may be other conditions before the sale to a HfH client is concluded. But after 13 years, she will be past such conditions. :)
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