REO under contract: Fire Before Close

[Matt T.]

Good Morning! I have an REO SFR under contract as of seven days ago. Yesterday I learned a detached single car garage caught fire and burnt to the ground. In the process it did some serious damage to a neighbor's detached garage as well. I had my guys take pictures and forward them to my realtor. He is going to ask the bank for a discount. Bottom line, garage or no garage, the numbers are still there (2.5% rent to rehabbed price and 50% rule).

I'm scheduled to close in a couple weeks. It's a cash purchase so financing/appraisals are not a factor. Not asking for legal advise, just curious if any of you have had a similar experience. Thoughts? Would you have any concerns?

Thanks in advance. I'm new to BP and learning a lot.

[Mike G.]

My concern would be a liability issue for the neighbor's structure. Clearly, the bank still owns the property so they should be liable, but... Personally, I'd want to have some legalese in the contract saying the bank indemnifies me, or whatever the appropriate legal term is.

The other concern is - why did the garage catch fire?? Was a transient living in there? Was there faulty wiring? You want to make sure that whatever happened there doesn't happen in the house.