Make offer on a foreclosure contingent upon home inspection
Q. I have been looking at foreclosure homes hoping I can get a nice deal on my first home. Most are in pretty rough shape. The real estate agents are all telling me that the bank won't fix anything and that I have to take the house in the condition that it's in. Is this true? What if I sign a contract and find out the roof needs replacing? It doesn't seem right that I just have to accept whatever problems the house has.
A. It is true that as a general rule, regarding bank-owned property, the property is being sold in it's current condition. It is further true that generally, the bank will not make any repairs to the property. This does not mean, however, that you are forced to accept a property that contains unexpected problems.
In most transactions of this nature, the bank will include a rider to the contract providing that the bank is making no representations regarding the condition of the property and that you are accepting the property "as is." In most cases though, the bank encourages the prospective purchaser to conduct an inspection of the property and includes a provision in the contract providing for the inspection.
If the inspection reveals defects not contemplated when you made your offer, so long as you comply with the terms of the contract, you would be able to either terminate the transaction (and receive any deposit back) or negotiate a price reduction. If you determine, for instance, that the roof is in immediate need of replacement and the bank refuses to credit you the amount of a new roof, you would have the option (again, presuming you comply with the terms of the contract) to terminate the contract and recover your deposit or continue with the transaction.
The inspection is a crucial element to purchasing bank-owned property because in the event you discover problems with the property after the closing, the contract will preclude you from going after the seller to help pay to correct the problem. These contracts make it absolutely clear that the seller has no knowledge of the condition of the property, makes no representations regarding the property and cannot be sued regarding any post closing issues regarding the property.
If you wish to pursue one of these properties, make sure you retain a qualified inspector to conduct your inspection, not your brother-in law Ed. A mistake here may turn out to be very expensive.
Q. Please explain again how much time I have before the bank can take my house. I have missed the last two payments and may miss a couple more before some money starts coming in. Can it happen that quick?
A. No. Under the Illinois Mortgage Foreclosure Law, you have the longer of three months from the date of judgment or seven months from the date of service of a Complaint to Foreclose Mortgage before you lose your rights to redeem the property. If you have missed two payments, I would guess a complaint has not yet been filed. From the day you are served with the complaint for foreclosure, you have a least seven months to redeem the mortgage. In the meantime, you have the right to retain possession of your property.
Keep in mind redeeming a mortgage is different from reinstating a mortgage. You have the absolute right to reinstate your mortgage within 90 days of being served with the complaint. That means if you satisfy all your back payments and further pay all other costs incurred by the mortgage company in bringing the lawsuit, they must allow you to continue on as if nothing ever occurred. After 90 days and through the longer of seven months from the date of service or three months from entering of a judgment, you have the absolute right to redeem the mortgage. This means you have the right to pay the balance of the mortgage plus any costs incurred by the mortgage company.
Attorney Tom Resnick's column appears in Homes Plus. Send your questions to Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by e-mail to tdr100@hotmail.com or call (847) 359-8983.