Purchase Disclaimers

As is always the case with foreclosures, there are risks. Before you move forward with your membership, we ask that you carefully read and agree to each item in our checklist waiver. The list has been developed for your own protection.

 

PLEASE NOTE: The listed issues will occur in some properties, but certainly not in all properties. Whether they apply at all, and how many apply, will vary.

Homes in neighborhoods and cities that are economically depressed are likely to have a higher degree of "toxicity." Be prepared.

 

Purchase Disclaimers

1. The home may have been bought with very little or no due diligence
   
2. The home may not convey with good or timely title
   
3. The home may not have title insurance
   
4. The home may have outstanding housing code violations
   
5. The home may have been vacant for some time
   
6. The home may have attracted squatters or vagrants
   
7. The home may have been vandalized
   
8. The home may be condemned, or may be facing condemnation
   
9. The home may be subject to liens, including utilities
   
10. The home may require critical maintenance to return to "usable" or "livable" condition
    
11. The home may be selling "as-is"

Determine reason for purchase of property (e.g., resell, for personal use) and how this will affect the transaction. 
Determine address and location of the property; obtain any applicable tax identification numbers, legal descriptions, assessor’s parcel numbers and any other governmental designations of the property.

Identify record owner of the property and period of ownership.   

Determine past record owners of the property (obtain name and period of ownership for each) through chain of title examination. Consider using online resources such as zillow.com and consulting with a title insurance company. 
Determine market value of property.  Consider using online resources such as zillow.com for historical information on the property and consulting with an appraiser or local real estate agent or broker to determine current value of property.  Also, consider that repairs (cosmetic and non-cosmetic) may be needed for the property and how this will affect the value of the property.

Determine desirability of neighborhood, schools, and accessibility to freeways and stores.
Identify whether anyone is living at the property.  This could be a tenant, the prior homeowner, or a squatter.
Consider consulting with local attorney to discuss state-specific issues, such as potential liability to successor owners of property following foreclosure sale.

INSPECTION OF PROPERTY

Consider a professional inspection of the property.  If access to the property is not possible, consider inspecting the property through Google™ maps and conducting online research on the property address, including the city and county where the property is located.  Also, consider visiting the neighborhood and making inquiries of neighbors.
Evaluate general appearance of home.  If possible, inspect interior of home to determine extent of damage, if any. It is not uncommon for a homeowner to do extensive damage to the property prior to foreclosing.  It is also possible that the property may have been abandoned for a prolonged period of time and is in need of extensive maintenance and repair or may have been subject to vandalism.

Identify water towers, above-ground tanks, underground storage tanks, cellular phone towers, high tension wire towers, transformers and other electrical facilities, etc. which may burden the property and evaluate whether such items may raise concerns in the future.

Confirm direct access, for purposes of vehicular and pedestrian ingress and egress, of all relevant portions of the property to one or more public streets or roadways.  If no direct access, evaluate alternatives, including any existing easements, or if easements required to be created, availability of easements.

Determine whether there are any existing building code violations or other violations exist with respect to the property. 
Determine if there is ongoing/unfinished construction or if there was construction on the property prior to the foreclosure which may have resulted in mechanic’s or materialmen’s liens and whether improvements on the property (e.g., extra rooms) are legal.

Consider need for any professional investigations to assess hidden conditions such as termite or rodent infestations, structural integrity, water intrusion or dry rot.  Consider need for any repairs or replacements, as revealed by such inspection and how this will affect the transaction.

Consider need for professional investigation to assess following environmental issues:
Determine Physical Condition (e.g., mold, air pollutants, underground storage tanks, pipelines, disposal of hazardous materials, effect of location of property near lakes, lagoons, impoundments, pits, septic tanks, trenches, dry wells, catch basins, ditches, trenches, or other open conduits that are or have been on the property, designation of property under federal, state or local regulations as wetlands, flood plains, coastal areas, habitat for endangered species or historical/archeological sites);
Determine Indoor and Miscellaneous Environmental Issues (e.g., asbestos, PCBs, radon, lead, chlorofluorocarbons, quality of drinking water); and
Determine adjacent land usage (developed, commercial, industrial, residential).
Determine whether smoke detector, water heater, sprinkler or similar ordinances are applicable to the property and whether the property is in compliance.
Obtain and evaluate Natural Hazard Disclosure Statement (California) or equivalent document, if available, for the property.

TITLE AND SURVEY

Obtain, if available, copies of all title insurance policies, title insurance reports, or attorneys’ title certifications related to the property.

Obtain from title company copy of deed by which seller acquired its interest in the property. 
Order new title search and obtain title insurance commitment insuring buyer on current ALTA Owner form (including appropriate affirmative coverage endorsements).  Obtain from title agent copies of all documents and exceptions described in title insurance commitment or title search.  Evaluate condition of title and all title exceptions.  Consider whether to competitively bid title insurance, if allowed under state law.  Determine what title policy endorsements are available, and at what cost.
Consider ordering bankruptcy, judgment, pending litigation, tax liens, mechanic or materialmen liens, and UCC searches.  The buyer must assess validity of all such liens, understand basis and legal sufficiency for each claim and evaluate what liens can be removed prior to or concurrently with any closing.  Consult with title company to determine whether any liens will affect ability to secure title insurance. 

Order new survey for the property, as appropriate, and if required by title company to issue title insurance policy.  Aspects of survey to consider/evaluate include: conformance to current ALTA/ASCM guidelines, current boundaries, all existing and proposed improvements, the street address of any improvements, all present and proposed utility lines and systems, and all easements, rights-of-way, restrictions, encroachments, setback lines, other title exceptions that can be plotted on such survey and inclusion of appropriate certifications as to survey matters.  Evaluate surveys and all conditions shown on surveys.
Determine if there are any third party has rights to use the property.  Examples are easements in favor of utility companies or neighbors.  These may affect ability to use the property.  Consult title policy to make this determination and consider getting appropriate endorsements.

Determine if property is affected by private restrictions and covenants (recorded and unrecorded).  The most common form of restrictions and covenants are CC&Rs.  These may affect use of the property and what can be done to the property.  Private restrictions and covenants may also require payment of assessments or impose duties and obligations on buyer.
Confirm, at or prior to closing, that all mortgages, deeds of trust and other liens encumbering the property (other than those mortgages and/or deeds of trust, if any, to be assumed at closing by buyer or as to which title will be taken subject to) have been satisfied and released of record or arrangements for releases have been made.    

REAL PROPERTY TAXES AND OTHER GOVERNMENTAL IMPOSITIONS

Obtain and evaluate:
Status of all real property taxes, agricultural taxes if applicable, other ordinary and special assessments, irrigation district easements if applicable, water and sewer charges and other impositions.
Status of all current notices of real property tax assessments and assessments as to any special or other impositions.
Status of any notices or letters advising of pending reassessments or forthcoming special assessments.
Copies of all real estate tax bills, reassessments and correspondence for the preceding five (5) years.
Copies of any pleadings, filings, notices and/or other correspondence pertaining to challenges, appeals or other proceedings concerning real property tax matters, special assessments and other governmental impositions.
Copies of any agreements and/or correspondence with governmental or taxing authorities concerning the deferral or reduction of real property taxes or other impositions, or payments in lieu of taxes.
Information concerning any special taxing or other districts in which the property is located.
Evidence that the property has its own separate tax parcel number and, if not, copies of the application submitted for a separate tax parcel number(s) and all information submitted with such application.

ZONING, SUBDIVISION AND LAND USE MATTERS 

 

Conduct independent investigation to determine compliance of the property with applicable zoning, subdivision and land use laws and regulations.

Review all applicable laws, rules, regulations, agreements, orders and approvals.

Consider contacting the local city planning office to request a zoning verification letter or meet with the city planner in charge of the district where the property is located.  This may be useful if the property is vacant or if buyer is interested in redeveloping/remodeling the improvements on the property.
Consider need for title insurance zoning endorsements.
Confirm with surveyor, if any, compliance of the property with respect to any applicable setback requirements.
Determine any contemplated dedication or proffers of any portions of the property to any governmental agency or private body.

INSURANCE 

 

Consider consulting with insurance agent regarding requirements to obtain homeowner’s insurance (e.g., flood insurance, fire insurance).

OCCUPANTS

Obtain complete copies of all leases, if any, including all amendments, addenda, exhibits, side agreements, lease abstracts, etc.  Inquire as to creditor-worthiness of each tenant.
Consider consulting with local attorney regarding landlord-tenant laws, including eviction of prior homeowners or tenants from foreclosed home.

UTILITIES

Contact utility companies servicing property to determine amounts payable in utilities and whether there are outstanding balances from previous owners that utility company may request be paid before new service can be activated. Utility company may also be able to provide information regarding water quality.
For new development, determine status of installations and hookups and if buyer will have to pay additional assessments to the city for facilities (see Mello Roos below).

CONDEMNATION 

 

Conduct independent investigation to determine whether any condemnations are pending or threatened with respect to the property.  If any such actions are pending or imminent, consider effect on transaction.

NUISANCE

Determine if property is located within airport zone.
Determine if property is located near landfills, farms, factories, or other undesirable improvements.
Determine noise level where property is located.
Determine if there are any other circumstances on the property or within the vicinity of the property that constitute or are likely to constitute a nuisance.

PERSONAL PROPERTY 

 

Determine if there is any personal property that will be included in the sale and whether personal property will be assigned to buyer at closing free and clear of all liens and security interests.

ASSOCIATION DUES

Determine if the property is subject to homeowner or master association dues.
Obtain and review CC&Rs from homeowner or master association, if applicable.

OTHER ASSESSMENTS

 

Determine if the property is subject to other assessments, such as Mello Roos (California).

ESCROW

Consider any financial adjustments which will have to be made at closing in connection with or as a result of acquisition of the property, including, without limitation, adjustments as to real property taxes and other governmental impositions, and utility charges.

Consider the cost of any taxes and other charges payable in connection with the conveyance of the property, and the recordation of the deed or other documents at closing.
 2005 ALTA/ASCM Minimum Standard Details requirements may be found at www.acsm.net/alta.html.

 

THIS CHECKLIST AND SUMMARY IS PROVIDED AS A COURTESY ONLY AND REBUILDUS.COM ASSUMES NO LIABILITY WITH RESPECT TO ANY ASPECT OF THIS CHECKLIST AND SUMMARY, INCLUDING, BUT NOT LIMITED TO, ANY INCOMPLETENESS, MISCHARACTERIZATION OR OTHER PERCEIVED SHORTCOMING IN THE INFORMATION LISTED OR REFERENCED HEREIN.  ALL BUYERS ARE ENCOURAGED TO PERFORM THEIR OWN DUE DILIGENCE WITH RESPECT TO ANY AND ALL PROPERTIES IN WHICH THEY MAY BE INTERESTED.

 

RebuildUS 2011

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