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Bank-Owned Properties Exempt From Disclosures......True, But The Judge Ruled Differently

 
In a normal real estate transaction, buyers are provided with disclosures from the sellers. These disclosures are usually in the form of questions which allow a seller to disclose any and all of the problems they know about which would affect the home. If part of the purchase contract, the seller is obligated to truthfully tell the buyer all defects/negative conditions associated with the property.
This could include:
Plumbing LeaksDeferred MaintenanceHOA RulesNeighborhood Noise
The list can be quite extensive...and in California includes an area to discuss "material facts or defects not otherwise disclosed to the buyer." It's very clear that the intent is to give the buyer all information they need to make an informed decision....and if the sellers withhold information they have, they can be held liable for damages. But this does not apply to bank-owned properties (REO).
In California, foreclosed properties are exempt from making these disclosures for the simple reason that the bank has never lived in the home and as such should have no knowledge of defects and/or past problems. Up to a point.
I have a client who purchased a REO a year ago and did not get any disclosures. We performed a home inspection ... more

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