Disclosure and REOs: You need to know this

When selling a bank- or real estate-owned (REO) property, some disclosure laws don’t apply.

That’s what we hear from the handsome and talented Blake Hegeman, our associate counsel. Apparently the Legal Hotline has been receiving a lot of questions about this subject.

Here’s the skinny:

Foreclosure and REO Properties: To Disclose or Not to Disclose….

The Legal Hotline has been inundated with calls concerning what must be disclosed when selling foreclosure or real estate owned (REO) properties. Specifically, do property owners’ association (POA) packets/condominium resale certificates, lead-based paint disclosures, and Residential Property Disclosure Statements have to be provided for both foreclosures and REO properties?

  • If a property is sold at foreclosure, none of these disclosures are required
  • If the property is REO (where the bank has taken the property back in foreclosure or by deed in lieu and intends to sell it), the following disclosures are required:

       – POA packet/condominium resale certificate
       – Lead-based paint disclosure for properties built prior to 1978

  • In either case, the Residential Property Disclosure Statement is not required.

About Andrew Kantor

Andrew is VAR's editor and information manager, and -- lessee now -- a former reporter for the Roanoke Times, former technology columnist for USA Today, and a former magazine editor for a bunch of places. He hails from New York with stops in Connecticut, New Jersey, Cincinnati, Columbus, and Roanoke.
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2 Responses to Disclosure and REOs: You need to know this

  1. Sarah Churchill says:

    Hello- I am working with buyers on a short sale. Are we required to preform a well, septic and termite inspection as we would in a normal (non-short sale) and if so, does the listing or purchasers side pay for those inspections? Many Thanks for the advice. Sarah, Real Estate III-James River Office, Scottsville, Va.

  2. Jackie Fortune says:

    I think the hoa/condo packets are very important for the new buyers to have. If it appears the property has not been painted since 1978 or so, and if paint is peeling, it should be scraped and repainted.

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