Many clients and prospective clients contact us and ask common questions based on advice from their relatives or a “friend of a friend.” These blog entries will unlock the mysteries of real estate law in Florida.
QUESTION: What Should if I know if I want to buy an REO/Bank Owned Property?
With the sudden downturn of the real estate market in Florida which started in 2007, there still remains a glut of “shadow inventory” or “bank-owned real estate.” It is important to understand that purchasing an REO or bank owned property is not always the bargain that it is perceived to be. First, the property has likely been vacant for many years and often has been without electricity and air conditioning for that same time period. As such, we always strongly recommend a thorough home inspection, mold inspection, and defective drywall inspection (all by licensed inspectors for that particular expertise). Notably, it is unlikely one inspector can perform all of those desired inspections.
Second, always make sure that the title company orders a comprehensive tax and lien search. Often these properties are in disrepair and have incurred code enforcement liens. Unless you demand the Bank to pay these liens at Closing, such responsibility will lie with the purchaser. Lastly, there is little negotiation in the contract as banks always require a non-negotiable addendum which waives many of the purchaser’s rights. It is always important to have an experienced Florida real estate attorney to review the contract to properly advise you of your rights (or lack thereof) when purchasing the REO/Bank Owned Property.