Signed contract this morning... condemned this evening

[Christina Brooks]

Hi All,

I have a question that I hope you can help me with. After two weeks of back and forth negotiation with an absentee owner of an abandoned property, we came to terms that we both agree on. I signed the purchase contract this morning and submitted the mortgage, note, and contract to the closing attorney to close Friday (a week from today). This evening I decided to drive by the property and I noticed a red sign on the door that says "Vacated... home is uninhabitable" posted by the city. I'm not sure if this means the home is condemned (and I plan to call them on Tuesday) but if it does am I still obligated to go through with the contract since I agreed to "as-is"? Can I still negotiate or completely walk away or am I stuck?

Thanks for any information or experience you can provide!

[Steve Babiak]

Call code enforcement and ask them. In some places, uninhabitable is a better condition than condemned; condemned usually means that they are thinking about tearing it down, uninhabitable means something needs to be addressed (plumbing leak, roof leak, insect infestation, electric wiring problem, etc.). But it could mean one and the same in some places ...

[Scott Williams]

Before you give up on the deal do what @Steve Babiak suggested call the city first then if it bad news,If you have a Due Diligence period you should be able to walk away Good Luck

[Rob K.]

A lot of cities in my area are tagging vacant houses and then forcing you to get city certs before it can be occupied. They make you pay several hundred dollars for an inspection and then send five inspectors (communists) into your home to tell you what you need to fix. They then give you a list of stuff, most of it will require a permit (tax).

To help you in this case, sometimes when they post it vacant, they assume that it is abandoned. I would go to the building department and explain to them that the house is not abandoned and you are trying to buy it. Let them know that you plan to fix it up nicely, but if you have to go through a bunch of red tape you might have to reconsider and let the house rot. Maybe they will be cool about it and help you out. I think going there in person is better than a phone call in this case.

If they are planining on tearing the house down, you will need to reconsider this deal and possibly lose your deposit if the agreement was as-is.

[Ed O.]

I get these all the time on empty units. If occupancy permits are required in your area, to you, the buyer, this notice means little. To the seller, it could scare them further and be something you could negotiate with.

[Christina Brooks]

Thank you all for your replies. That makes me feel A LOT better. I will go downtown on Tuesday and talk with them to find out exactly what's going on and what it will require to get the house back to a habitable status... and if all works out, close on Friday.

[Ben L.]

DON'T give up on the deal! You are still under contract right? The first step you should do is call the county and ask what exactly they put on the house. It may be as simple as a Code Compliance Violation on behalf of the county.

Tell the county that you are currently under contract to buy the house and ask them what is owed to "close" the violation on the property and if it is possible to wipe this dispute off the property since you are going to buy it and fix it up (if they say no, usually they will take a discount).

Also, make sure to check if you have any contingencies in your contract if the worst case scenario were to surface and you have to back out.

[Ned Carey]

I would think that you bought the property "As Is" the date of the contract. If it has been condemned or other code violation after signing then I would argue their has been a material change in the property and I have the right to walk. This could give you some negotiating leverage for a better price.

I am not an attorney and the above is just my laypersons understanding of the law. It should not be construed as legal advice for you specific situation.

Good Luck - Ned

[Joel Owens]

That would depend on the language of the contract you are using.

If the contract states that you are buying AS-IS based on the property not materially changing between executed and binding signing date and the closing date or you have the right to terminate then you should be fine.

If you had no due diligence,buy- as-is,and no material change clause built in then you are in a weaker position.

The notice as mentioned you just fix the deficiency.Even if it is set to be condemned you can repair and avoid that.

It all depends on how much money will be required to fix it and get cleared versus the purchase price and after repair value.

People always get worked up over earnest money amounts.I think that isn't as important as non-refundable money.

I would rather have 10k non-refundable EM than 40k with a ton of loopholes where the buyer locks the property up and back out.The higher EM amount is worthless then to the seller.

No legal advice.

[John Bowen]

Went through a very similar deal last year on a hurricane damaged forclosure house that had been that way for almost 3 years. The day before closing we drive by and there is a big sign posted in the yard about a city hearing to tear it down along with postings on the door.

Called a time out on closing and called the city building official. He stated if the city had a repair plan and timeline approved prior to the hearing that it would recommend repair instead of demolishing it. No problem had that on my computer and emailed while on the phone. He had me take out a few things like landscape and such to stay under the 50% damaged FEMA guidelines. Told me as soon as we owned the house he could approve the plan.

This was a VA forclosure involving a bank in Florida and an asset managment call center in India. Told them I was reducing the offer 30% if they wanted to close. They said no. This went on until 3 days before the hearing. Finally their American problem solving woman gets involved. She called me, called the city, and then called back. Offered 15% off. We said no. She agreed to the 30% close the next day.

Ended up making $10K off that city posting and my plan didn't change except the start date was pushed a month.