Some new twists to the same old REO contracts

We recently ran across a Fannie Mae Purchase/Sale Contract (a/k/a as an “REO contract”) for a buyer that had some surprises buried in it. Here are some changes we noticed that buyers and realtors need to be aware of:

#1: HOA/Condo maintenance fees prior to the bank’s ownership

What the contract says: Bank is not responsible for any HOA/Condo dues PRIOR to their acquisition by a foreclosure action. What it means: If the prior owner that the bank foreclosed on did not pay their HOA/Condo dues in full, any balance due will be owed by the new buyer of the REO property. This can easily amount to tens and thousands of dollars.

Here is an actual page from that contract:

HOA dues prior to REO ownership to be paid by buyer

#2: Buyer to pay deed transfer taxes

What the contract says: Buyer is responsible for paying transfer taxes on the deed What it means: The deed transfer tax in Florida is .007 of the sales price. For example, on a $250,000 sale, the buyer would be contractually now be responsible for paying $1,750 in transfer taxes. In Florida, it is customary (unless specified otherwise), that the seller pay the deed tax, so buyers need to be aware of this expensive and substantial change.

Here is a sample of the section of that REO contract addressing the deed tax:

The Closing Company offers Buyer Representation Services that can assist buyers using a seller-selected title agent. Here is what that this service covers:

Need a complimentary, no-obligation contract review for an REO purchase? Contact info@theclosingcompany.net or call 305-271-0100×701.

Legal disclaimer: I am not an attorney and I am not providing legal advice. Please 
consult an Attorney for legal advice or before signing any legal documents.