Tip 10-2012: Termite,
Well and Septic Reports for "REO's"
Last week's Tip discussed similar
issues for Short Sales. This week I want to focus on REO's. If a
Purchaser is buying an REO property, the REO Seller will usually not pay for
any of these inspections. Therefore, it is up to the Purchaser's
Realtor to order the termite, well and septic reports. The usual REO
Addendum provided by the REO Seller, requires that all inspections must be
completed within ten days of final contract ratification.
Accordingly, do not forget
that the termite, well and septic reports are also required within the same
ten days. Normally the REO Seller claims they will not make any repairs
as the real estate is being sold "as is." If you do obtain
these reports within the correct time limit, the Purchaser is still able to
terminate the contract due to a failed well, active termite infestation or
significant mold presence. Additionally, armed with these reports, it
may be possible to negotiate a credit or a repair from the REO Seller as they
still want to dispose of the property.
A new issue with the termite,
well and septic reports concerns timing of payment; when does the Purchaser
have to pay for the cost of these reports? In the normal course of
business the termite company would bill the settlement agent and expect to be
paid at settlement. Now with the possibility that the REO Purchase
"may go South," several local termite companies are requiring that
they be paid in advance by the Purchaser.
It is a good practice tip to
warn the REO Purchaser that they may be asked to pay for these reports by a
credit card or check prior to the actual inspection.
Please contact me at
434-951-0858 or Tucker@TGBLaw.com if you have questions. Thanks for allowing us to send you these tips.
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Looking Forward: Smartphone sales will blow
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William
D. Tucker, III
Charlottesville
434-973-7474 | Lake Monticello 434-589-3636
|
Mar 9, 2012
Tip 10-2012: Termite, Well and Septic Reports for "REO's"
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