Q. My wife and I are attempting to purchase a short sale property. The contract states that we must do our home inspection within five days of the seller's acceptance, which is a few days from now.
Our problem is that our real estate agent is telling us that the bank will probably either reject our offer or counter our offer by raising the price. If this happens, we will have to bow out, as we cannot afford to pay any more for this house.
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The problem is we don't want to pay $350 for a home inspection if we're going to lose the house anyway. But we don't want to buy the house without an inspection. Is there a way to keep our inspection rights until we know we will get the house?
A. Yes. You will note the contract (most likely) also provides either party's attorney may make proposed modifications to the contract within five days of seller's acceptance. This is known as the Attorney Review or Attorney Approval period. During Attorney Review, most attorneys routinely attempt to extend the home inspection period to five days after being provided written proof that seller's lender has approved the transaction.
It sounds like you are attempting to negotiate this transaction without an attorney. There are numerous minefields in a home purchase and short sales are even more precarious. I urge you to immediately contact a real estate attorney familiar with these types of transactions.
Q. I am looking for my first home and have become very interested in a condominium where a friend of mine owns a unit. He travels a lot and is not around much, but he says he has heard that the development is having some financial troubles. How can I find out if this is true and maybe obtain financial documents for the association?
A. There are two ways to go about this. One would be to negotiate your purchase and sign a contract. Under attorney review, most attorneys will demand copies of the condominium documents and what is known as a 22.1 disclosure. The 22.1 disclosure provides important information regarding the development, including whether or not a special assessment is currently assessed or is pending, whether or not the association is involved in litigation, information regarding reserves, proposed capital expenditures and other pertinent information. The association will also provide balance sheets, income and expense statements and budgets as part of their disclosure.
In the event you or you attorney see something in the disclosure you do not approve of, you could terminate the transaction and have your earnest money returned, so long as you have complied with the time restraints incorporated into your contract.
If you are uncomfortable signing a contract prior to determining the financial condition of the association, you have another option. Financial documents are not available to nonowners, however, you have a friend that owns a unit. Ask your friend to make a request upon the association for all financial documents and monthly board minutes for the past 12 months. Your friend is legally entitled to these documents.
In the event there are significant financial issues with the association, more than likely the minutes will reflect discussion on the subject. The financial documents should reflect a healthy capital reserve, income that exceeds expenses each month and little or no debt.
• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to firstname.lastname@example.org or call (847) 359-8983.