Legal Question in Real Estate Law in California

Re: Escrow

I assume that the purchase contract contains much of the standard language included in REO sales, including the fact that the property is being sold As-Is? If so, you entered into a contract to buy a property that may not be capable of financing traditionally. As such, your options are to seek out alternative financing which will not require these repairs, to cancel the deal, or to take the risk. I would not suggest the later, however, the bank is truly in charge in these cases, and if you don't agree to accept their terms for modifying the deal you have already accepted, then your only remedy is to cancel. There really is no way to protect yourself if the bank is not willing to accept that as a condition - and, by the way, most banks will not accept what you are requesting.

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Re: Escrow

I would say the best, perhaps the only, way to "protect" yourselves is to make sure (to the extent possible) that the deal is going to go through. Recognize that in gambling for the rewards of buying distressed property on "non-standard" terms, you are necessarily accepting certain risks, costs and inconveniences that don't usually accompany mainstream market real-property transactions. For example, if there is a 30% probability that you're going to "eat" $7,500 in repairs to get financing, think of this as a reason why the price is (maybe) $40,000 or so lower than it would be in good condition and not an REO.

Re: Escrow

You're buying an 'as is' property, just like a private party used car. There are no warranties or safety nets in such risky transactions. Investigate and inspect before you buy.