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:
- 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.
- 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.
- 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.
- 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)