Ask Me Help Desk - Bank reo addendum

OK, I'm buying an reo property but I've just been hit with this addendum to sign. I have 3 questions and would appreciate any help:

1. The listing agent says (according to the bank) I have 24 hours to sign. Is this strict? Should I be getting an attorney to review the addendum because I can't even get that done in 24 hours.

2. It makes reference to the potential "right of redemption" of prior owners. How do I check on this? Am I at real risk?

3. It says that the buyer indemnifies the bank for unpaid HOA fees etc. I know there are unpaid HOA fees and the listing agent specifically told me the bank would be paying them. This addendum seems to contradict that, at least that is how it seems to me.

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Originally Posted by realtyseeker

OK, I'm buying an reo property but I've just been hit with this addendum to sign. I have 3 questions and would appreciate any help:

1. The listing agent says (according to the bank) I have 24 hours to sign. Is this strict? Should I be getting an attorney to review the addendum because I can't even get that done in 24 hours.

That depends on what is included in the addendum other than what you've told us here. Are there things in there that you don't understand? Did you have an attorney review the original contract?

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2. It makes reference to the potential "right of redemption" of prior owners. How do I check on this? Am I at real risk?

The only risk I see is that if the prior owners exercise their right of redemption then the bank will have to cancel your contract and return your deposit. You should make sure that the addendum states that all of the deposit will be returned to you and you should also try to get them to reimburse you for your costs such as home inspection, title fees, etc. But don't hold your breath on that one.

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3. It says that the buyer indemnifies the bank for unpaid HOA fees etc. I know there are unpaid HOA fees and the listing agent specifically told me the bank would be paying them. This addendum seems to contradict that, at least that is how it seems to me.

That is definitely a contradiction. Do not sign the addendum with this clause included or you will be paying the HOA fees.

Do you have a selling agent representing you? If so then they should be negotiating this for you. If you don't have a selling agent representing you, and since you are being told one thing by the listing agent and the paperwork says the exact opposite, I think it would be a very good idea to get an attorney to represent you.

Thanks Lisa. It's pretty much the standard addendum and from what I've read online the bank pretty much adopts a 'take it or leave it' approach. You either sign or you pull out but they don't change the standard wording. Nice, typical bank.

I do have a buyer's agent who is looking into the HOA dues situation. I have not engaged an attorney. I'm in two minds about it... mostly it's just the standard agreement, definitely slanted in the bank's favor. Is there any point if the bank is not going to allow changes anyway?

Even if the bank isn't willing to allow any changes, it still might be worth having an attorney review the contract and addendum just so you'll know exactly what you're getting yourself into and all of the things that are not to your advantage. Then you have to weigh how badly you want the house vs. how much risk you're willing to take.

But I'm an attorney. I'm always going to recommend that you get an attorney to represent you. :)

As for the HOA dues situation, keep in mind that the bank's requirement that you pay it will possibly mean a substantial increase in the cost of the house.

Lisa, you've been really helpful, thank you.

I don't want to disrespect your profession in the least (promise!) but I have sometimes wondered (and this is a legitimate question) whether attorneys have been made somewhat redundant in the process because of the massive standardization of contracts. I've bought a number of properties over the years and the contracts are standardized. There does not seem to be that much to it. The Title company and the title insurance seems to protect against a problem there.

So it's not a provocative question - it's a legitimate question as to 'is it truly in a standard situation worth the money to hire an attorney?'... now granted in the foreclosure context there's more complexity and so it might be worthwhile. But in the standard bread and butter transaction, are attorneys still needed?