Bank sales have been a sizable portion of the sales in Northern Virginia in some communities ever since the glory days of 2005 and 2006. While prices may have started approaching the top-of-the-market prices in some areas, other areas are still trying to recover. Hence, even with increasing prices, there are still foreclosures happening.
Properties sold by a bank often have limited contingencies. Buyers therefore often wonder if the POA/HOA resale documents can still be used to “get out of the contract” if they don’t want the home for some reason.
First, the home would obviously have to be in a homeowner or condominium association to be covered by the Property Owner Association (POA) act. Next, we have to look at the type of sale we have.
Most purchasers buying what they call a “foreclosure” isn’t actually buying a foreclosure at an auction. They are buying a property listed by an agent on behalf of the current owner (the bank.) It is what is called a REO property (Real Estate Owned – don’t ask me why…)
Homes sold at an actual foreclosure auction DO NOT have to provide the resale certificate required under the POA Act. Hence, if you purchase a foreclosure you will not have the right to void the contract within X days after receiving the packet (the number of days depend upon the delivery method etc.)
You will very likely buy the property from the bank and not at an actual foreclosure auction. As it is a resale after the actual foreclosure (during which the bank actually purchased the property through the foreclosure process), the POA Act would apply as long as the home is actually in a Property Owner Association. You would in that case have the typical time-period to review the resale disclosures (and to void the contract if you wanted to.)
So, buyer beware and keep in mind:
- if you buy a foreclosure at an actual foreclosure auction neither the Led Based Paint disclosure (for pre 1978 homes), Property Disclosure Statement nor the POA packet are required.
- if you are purchasing a REO property, and the home is otherwise covered by the POA act, the POA packet and Led Based Paint Disclosure(for pre 1978 homes) are both required. A Property Disclosure Statement is not required.
If you are looking to buy a REO property, give us a call. There are still deals left out there!
Disclaimer: I am not an attorney and this is not legal advice. Consult an attorney as every situation is different.