Buying an 24 Unit Apt Building with a recent FIRE

[Benjamin Schultz]

(Maybe) Buying 24 unit apt building with 5 retail spaces. 

In Aug 2019 there was a minor fire in one of the apartments. As a result, the building was DOUSED with water and 12 apartments and 3/5 retail spaces were knocked off-line. The tenants were vacated, the 12 units/3 retail was just about gutted, and the this past Fall/Dec/Jan were used to essentially renovate + build brand new. The work is now complete and Certificates of Occupancy were delivered last week. Doors now back open. Hurray!

BUT, as part of the PSA, we’ve requested the seller assigns us the builders warranty (at least for 1 year). for the heavy reno work that was done. We can structure the PSA language to alleviate the seller post closing of any involvement SHOULD a warranty claim come up in say August 2020.

The seller is reluctant to assign us warranty info which seems to make no sense as its no sweat to him. First he said he contractors didn’t want him (or wouldn’t allow) to assign the warranty, and then he claimed that there simply wasn’t a warranty.

Q for you – Does this sound accurate? The work was (I’m quite confident?) done via his insurance carrier – is it possible they’d work with a contractor who wouldn’t issue a construction warranty for this large a scope of work? What do you know about the “assignability” of a construction warranty in a sale – my attorney seems to think its very reasonable/doable.  BIGGEST QUESTION - WOULD YOU PROCEED HERE WITHOUT A CONSTRUCTION WARRANTY ON THIS RECENT WORK?

Thank you! Ben

[Taylor L.]

@Greg Dickerson would be the first guy I'd ask

I would certainly want some assurance. The only way I'd feel comfortable is if I got the building for a smoking hot price (no pun intended)