{ February 20th, 2012 }

Advice On Buying A Foreclosure

I receive dozens of email newsletters each day.  Many don’t seem to deliver anything of actual value-  they’re essentially thinly veiled sales pitches.  Others, like the one that I receive from Atlanta closing attorneys Neel & Robinson, are chuck full of good real estate information.

Here’s some advice that they just sent out regarding the purchase of a foreclosures (or as banks often times refer to them as, REO properties).  For those of you thinking about buying a foreclosure in a community with a homeowners assocation (townhomes, condominiums, etc.), this is a pretty important read:

When an REO (“Real Estate Owned”) property is being sold, there are several additional steps, considerations, and possible delays if the property is a condo or in any kind of HOA (Homeowners Association).  Each of these steps can add days to the pre-closing period, due to the difficulty in getting information and getting the seller’s approval.

Here are the steps involved with every REO property that has mandatory dues:

1. The closing attorney must have a copy of the recorded DUP (Deed Under Power = foreclosure deed) to order the HOA letter.  The HOA dues prior to the foreclosure date are wiped out, but the HOA must see the actual recorded DUP before providing a status letter.
2. Need contact name, phone, email for the HOA – the foreclosing bank has never had any contact with the HOA, so the listing agent needs to investigate and then provide this info to the closing attorney.
3. Many HOA management companies now require prepayment (by credit card) from the seller or listing agent to release the HOA status letter.  These fees can run as high as $175.  The closing attorney can order the letter, but the HOA will not release the letter without the payment prior to closing.
4. The seller’s attorneys usually require a longer review time if there is an HOA, sometimes up to a week, once the HOA letter is prepaid, prepared, and received.  This is in addition to the standard 72 hours the seller’s attorneys require to review the final HUD-1.

Edit Credit:  Neel & Robinson (note that all hyperlinks were added by A is for Atlanta)

Posted by Jon Effron

Labels: Condominiums : Current Events : Distressed Sales : Home Buying : Legal