We purchased a foreclosed condo, for sale by a Bank, represented by a Lawyer out of Calgary. It was one of those situations where the Buyers loved the first place they seen and wanted to buy it. They didn’t know it was in foreclosure, the learning curve for them to make an informed decision was steep. This is what we considered.
The Buyer was concerned that outstanding debt will transfer with the Title of the home and the new buyer will inherit the debt. Looking at the contract the bank offered us, this was not the case, most notably 10.4 a., b. and 10.5 from the standard form purchase contract were left intact. We did however go through the entirety of the bank’s offer contract with addendums and schedules with a real estate lawyer, to ensure the buyer understood the risk he was taking on while purchasing. Here are some of the topics that came out of our discussions.
– Appliances are not included in the sale. They may or may not be in the home on possession day. They may or may not work.
– There are no representations or warranties that come with the property. Notably, when a Seller sells, they often represent that there are no hazardous or expensive fixes not detectable through reasonable inspection. They are not hiding defects which could affect the market price. The Seller in a Foreclosure gives no such guarantee. The property is “as-is”
– The parking stall was with this unit was “assigned” to the unit from the condo board and the property manager rather than “titiled” therefore it was not included as part of the sale. This is an important distinction. Titled parking has a legal title is individually owned, and ownership can be transferred from one party to the next. With assigned parking, the condo board owns it and can assign it at will. The user (the condo owner) gets temporary use of the space up until the condo board feels otherwise. It was important to get, in writing, from the property manager that the assigned stall was staying with the unit for the time being. Although it was not part of the sale, having an underground stall with a storage cage was important to the buyer. We couldn’t eliminate all risk for the buyer, but I hoped to give him a fair understanding of the ownership rights of the space and the subsequent risk he was taking.
– this Seller did allow for conditions on the Purchase Contract although did not provide Condominium documents, the buyer, at there own expense ($400ish) or so paid for and ordered the package to inspect at their own risk. The risk here being, if there were fundamental problems discovered during the document inspection that were significant enough to kill the deal, the buyer would be on the hook for the cost of the documents and the cost of inspection, instead of a more traditional deal where the buyer would be on the hook for inspection.
The Buyer did have significant anxiety during the process. Avenues which did not help were online readings of foreclosure horror story purchases during the purchase. Working hand and hand with legal counsel and keeping avenues of communication open helped close the transaction for the benefit of the buyer.