Ordinary home sale can become more complex than you expect

I was recently approached for help in buying a home. One of the homebuyer?s most important criteria was to find a home on which we could close quickly, to coincide with the end of his current lease arrangement.

For anyone who has wondered how complicated an ordinary real estate transaction can become, read on.

On our first day of looking at houses we found one that in the buyer?s opinion was clearly the best of the bunch. This 30-year-old house sported new paint, carpet, and what appeared to be some rebuilt structure.

Back at the office, a little research revealed there had been a fire that destroyed part of the home. The seller bought it after the fire and was apparently doing a ?fix and flip.? The buyer felt this was to his advantage, as various parts of the house were now new construction. He was happy to write a contract, asking for a quick closing.

When we attempted to submit the contract to the seller?s Realtor, the trouble began. Their main number was an answering service, which offered some direct numbers. Trying these numbers, we discovered the seller had engaged the Realtor in a minimal capacity, and all dealings were to be directly with the seller.

We contacted the seller and came to an agreement on a price and a quick closing date. During that discussion I discovered I had to explain important aspects of this transaction to the seller, such as title insurance, the buyer?s loan arrangements (an FHA loan that allowed for down payment assistance), etc. The seller also had not filled in any of the required disclosures, so I provided some pointers on how to get those done quickly.

I contacted the city and learned the necessary permits had been obtained for the repair work on the home and the appropriate inspections completed, all except the final inspection. The seller seemed only a little concerned about this, but had dealt with the city enough to understand the urgency of pursuing it immediately. The following day the seller called back, slightly frantic, saying the city felt some roof work wasn?t finished. We agreed the buyer would be provided the city?s sign-off prior to closing.

One week before closing the title work arrived. It indicated a significant lien had been placed against the property by one of the contractors who repaired the fire damage. I called the seller, who said ?It?s not a problem ? the contractor is a friend of mine. I?ll call and get things resolved.?

The following day I received a now truly frantic call from the seller. Since recording the lien, the seller and the contractor had not kept in touch. In the course of reestablishing communication, the seller had learned that, tragically, the contractor had unexpectedly died two days earlier!
Several days later I received a call from the contractor?s father, who had come into town for the funeral. He had spent as much time as he could, given the circumstances, looking for a will. He hadn?t found one and had begun discussions with probate court. That same afternoon I heard from the city their final inspection was completed. Small consolation, given our other problems.
By this time my buyer was pretty edgy about the whole situation and the upcoming end of his lease. He still liked the house, so we decided to press on and negotiate with his landlord for a few extra weeks of breathing room. The buyer?s lender was also worrying, as the interest rate lock on his loan was soon to expire, and rates had gone up.

The seller then offered to escrow funds to cover resolution of the lien at some future date, but the title company refused to issue title insurance not knowing the details of that resolution. The lender refused to complete the loan without title insurance. The seller then offered to carry the loan, feeling confident the lien would be resolved satisfactorily. The buyer refused to agree to that.

Ten days after the scheduled closing date, the lien was resolved, thanks to some rapid action in probate court. The seller had even agreed to help fund the buyer?s costs in extending his lease. One week later (and one day before the loan lock was due to expire) the contract closed, and the buyer and seller went away happy.

Is there a moral here? I suppose a lesson would be that it?s easy for real estate transactions to become more complex than anyone would like. Cross all your t?s and dot all your i?s ahead of time, and watch out for surprises.

Dave Shaw says he enjoys helping his real estate clients work through special challenges as in this story. Shaw is a licensed Realtor working with the John Wayne team at Coldwell Banker Residential on 28th Street in Boulder. He can be reached at (303) 441-2445.

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