*The
normal NC Offer to Purchase
runs around 7 pages. For bank owned sales there will
be a number of addenda which will bring an offer up to
around 20 pages in length.
*Such addenda contain language that adds
buyer responsibilities and removes some normal buyer
contingencies. Language additionally provides that
in the event of any conflict with the NC Offer to Purchase,
that bank addenda will control. Courts will almost
always favor the provisions of addenda over those of
standard contracts.
Highlights: Typical Bank Owned Terms &
Conditions
Prior to an actual
offer, the following kinds of items often apply:
1) Buyer letter of pre qualification or proof
of funds must be
included, 2) Usually 5 days from verbal acceptance to submit clean
copy of offer, 3) Certain persons are excluded from buying,
the list varies with each bank but typically includes
employees, bank
sub contractors, relatives by blood or marriage of bank
employees, and sometimes step children, etc 4) All communications must go thru listing broker.
*All addenda must accompany any
offer. In the event of any conflict with
the
normal NC Offer to Purchase,
bank documents will control.
*Buyers specifically
waive all claims, even if such claims arise from
normal provisions in the NC Offer to Purchase, even if
Seller checked boxes and signed such NC form. Language
to this effect will appear several times in bank documents.
*Some properties may require repurchase
by the initial mortgage servicer prior to closing, and as a
condition of this sale. In practice, this is said to
be highly unlikely as the original bank would not be
inclined to make an offer on assets it has already
liquidated.
*Features: Sellers makes no warranties whatsoever
regarding the existence of features, services, etc related
to a property, e.g., infrastructure, amenities, utilities, ad
infinitum. Even if Buyer has NC rights in this regard, such rights
are "specifically waived, disclaimed, and rendered null and
void".
*Title: Full extent of seller's
obligation about title is to provide insurable title,
however seller will ONLY defend title against claims that arise
"through or under grantor", (grantor = seller).
These are the general conditions of what is known in NC as a
Special Warranty Deed. The usual deed in NC is called
a General Warranty Deed.
*Special Warranty Deeds in NC
protect buyers from title defects caused by the seller, NOT
from defects that may have been caused by previous owners.
This will specialize a title search and increase costs to
buyer. Local attorneys are starting to deal with such
items, and most banks have a clause where buyers can request
some dollar amount of assistance for closing costs.
*Time is of the Essence: A key phrase
with respect to "all dates specified". The phrase
occurs in NC documents, but is not cast in stone as long as
all parties continue to act in good faith. In typical
bank
documents however, there is less latitude for good faith
actions, the tone surrounding dates is more firm.
*Closing occurs in office of seller's
attorney or agent. Prior experience for us however is
that this is waived and buyer chooses the location.
*Prorations: Most prorations are
normal with respect to NC practice on items such as taxes,
utilities, fuel tanks/contents, assessments, etc. Day
of closing is charged to buyer, this also is normal in NC.
HOA Fees: Most banks specifically disavow any
liability for HOA fees that accrued prior to their acquisition of title.
Comment: As this is being written, determining the
amount past due HOA fees prior to an offer has been
problematic. The issue comes down to the individual covenants
and perhaps the vitality of any HOA whether buyer has
exposure.
*Sale is "As Is" in every
conceivable way and again disavows the NC Offer to Purchase
in all regards. One gets used to the words
"specifically waived, disclaimed, and rendered null and
void". In most local cases banks are exempt from
The NC Residential Property Disclosure Statement.
Burden here falls completely to buyer.
*Bugs: Often an Official NC Pest
Report is supplied, sometimes it is
several months old. A number of banks have their own
Property Condition Addenda and Release forms.
*Fixtures: Seller disavows any knowledge about title
to, or liens upon, personal property, etc.
Investigation falls buyer to determine exposure, e.g., liens
on appliances or furniture.
Home Warranty: Some bank owned homes are
listed for sale with a 2 year home warranty, and allowances
for new energy efficient appliances. Certain
conditions pertain as the the intention of the buyer for the
home as an investment, primary residence, etc. Most bank owned homes are missing
some appliances such as refrigerators, stoves, etc.
*Environmental: Seller disavows
anything with respect to mold, environmental hazards, ad
infinitum to buyer, heirs, tenants, forever.
*Inspections: Buyers usually have 10
days from acceptance of offer to complete, compile, analyze,
evaluate any and all inspection reports. Inspections
may not begin before that, cost of turning on water and
utilities are usually paid by banks, but
may fall to buyers at certain times.
*In the event inspections reveal material
deficiencies, a typical scenario would give a buyer 12
days after acceptance of offer to "furnish written notice of
cancellation, together with the inspection reports, and a
written notice of deficiencies." Failure to do so
would be fatal and buyer is
bound at that point.
*Indemnity: Seller bears no liability
for damage to property caused by buyer or its
agents/inspectors, or for injuries to buyer's people, etc, etc,
during the time of inspection.
Likely buyer's contractors/inspectors are well aware of such
things in the present market.
*Financing: If purchase is subject to a
loan, buyer usually has 7 days from acceptance of an offer to secure
qualification by lender.
*Closing Costs/Concessions:
Regardless of local custom or requirements, sellers usually
have no obligations with respect to closing costs.
Buyers will sometimes have the option, as part of an offer
to request some dollar amount of closing costs assistance.
*Title Insurance: Some banks agree to
pay buyer's title insurance only in the event that buyer
uses seller's title insurance company. This is normal
NC practice.
*Tax Stamps: aka, Excise Tax, seller is
exempt federally, however, if required under state law, such
taxes will
be paid by buyer at the rate of $2/$1,000 of sale price,
i.e., a $100,000 transaction would have excise taxes in the
amount of $200.00.
*Remedies: Should a contract break
down by the actions of either party, then both agree, (does
not say "may agree"), as a "suitable and preferable" remedy
to recover "liquidated damages" in an amount not to exceed
$1000.00, upon demand as "full and complete compensation",
and waive any other claims or remedies.
*Buyer Represents: Several items with
respect to use of the home, relationship to F Mac employees,
etc.
*Deed: "Upon acceptance of a deed",
buyer acknowledges complete discharge of all seller's
duties, and waives any future claims.
*Real Estate Commission: % is
specified by F Mac.
Notices: In a series of departures
from NC rules, notices are deemed to be received by either party at
certain times that are specified according to the means of
delivery, e.g., fax, email, US Mail, etc. (Para 25).
*Attorneys: Buyers acknowledge full
acceptance and understanding of F Mac conditions.
*Legal Fees: In the event that any
claims in a F Mac transaction should give rise to attorney's
fees, both buyer and seller waive any claims upon the other
for recovery of legal fees.
