As-Is Foreclosure Property with Underground Oil Tank

[Siberianoutback]

What is the name of your state? New Jersey

We're in the process of buying a foreclosure property. The contract states that there is no undergound oil tank, but our home inspector found one. Is the bank required by law to remove it? If not, what are the chances they would, considering that we have a mortgage commitment and they are pretty much guaranteed their money?

We don't want to pay for removal. If they refuse to remove it, can we get out of the contract and get our $1000 deposit back?

Thank you!

[Shay-Pari'e]

Yes, you can get out of the contract since the tank was found. I doubt the bank will remove it, they can alway's resell the property.

[nextwife]

REOs are sold as is. The inspection clause allows you to legally walk from the deal if you find a defect you do not want to fix yourself.

My own home was owned by a trust company. I bought it , THEN proceeded to complete about 12,000 of work after closing that I understood in advance would be needed. If I didn't want to do any work, I shouldn't have been buying that sort of property.

The presumption when selling REOS is that most buyers know and understand that they are going to be doing the work they feel needs to be done after they close. The REO owner is not obligated to do anything that is not in the contract, nor are you obligated to buy if your inspection clause gives you an "out".

[Siberianoutback]

Allow me to elaborate...

The home is actually a short sale. It will go up for sheriff's sale the end of March.

The seller's real estate agent spoke with an agent who has dealt with this type of situation before. They stated that since the bank has already paid for appraisers and are so far into the paperwork for our sale, that chances are they would pay for the tank removal out of what the seller owes.

I understand that with an "As Is" sale you are responsible for repairs to the home, but an oil tank poses an environmental hazard that could cost anywhere from $2,000 to $100,000 if the tank is leaking. The home would basically be unsellable, wouldn't it? Does the bank get less money in a sheriff's sale, so it's worth it to remove the tank and have us buy it?

I guess I wondered if in the case of an oil tank, the bank is required to remove it, and if not, does it sound like this real estate agent knows what they're talking about, and the bank would most likely pay for it?

Thanks

[nextwife]

Originally Posted by Siberianoutback

Allow me to elaborate...

The home is actually a short sale. It will go up for sheriff's sale the end of March.

The seller's real estate agent spoke with an agent who has dealt with this type of situation before. They stated that since the bank has already paid for appraisers and are so far into the paperwork for our sale, that chances are they would pay for the tank removal out of what the seller owes.

I understand that with an "As Is" sale you are responsible for repairs to the home, but an oil tank poses an environmental hazard that could cost anywhere from $2,000 to $100,000 if the tank is leaking. The home would basically be unsellable, wouldn't it? Does the bank get less money in a sheriff's sale, so it's worth it to remove the tank and have us buy it?

I guess I wondered if in the case of an oil tank, the bank is required to remove it, and if not, does it sound like this real estate agent knows what they're talking about, and the bank would most likely pay for it?

Thanks

I WORK for a bank and deal with short sale decisions. The bank is not obligated to cover the repair cost. Matter of fact, if they analyze the numbers and would be TOO negative in the deal, by covering the repair, they may even "walk" and NOT want to foreclose. I've seen banks walk away from properties if there are too many financial potential risk exposures.

You can have your broker present the idea, but, ultimately, the bank will decide based on the situation, and have no obligation to agree.