Feb 22, 2013
By: Deidre Woollard
Q: We found foundation problems found after buying a foreclosure house, what recourse do we have?
We bought a foreclosure house two years ago. And now we found that there are cracks shown on the wall. Also, there was a big crack outside of the attached garage which we did not notice before buying. Can I ask the bank for any compensation or do I have to eat it up since it was a foreclosure?
A: Foreclosure or not, the repairs are your responsibility.
The only recourse you might have would be against the home inspector, but it’s doubtful that a judge would hold even that person liable. It’s been at least two years since the home was inspected and a lot can happen to a house in that amount of time. – Stacey
A: If you go back to your original contract addendum from the bank you will see that you have no recourse with them as to the foundation problems because you purchased the property “as is.”
In fact – it was probably stated in more than one way on the addendum. Because the bank has no knowledge of the property’s history or condition – you assume all of the risk. That’s why the prices on foreclosures are so low.
I’m sure you had a home inspection performed for your information on the property before you purchased it and you might want to review the report again to see if the inspector noted any foundation problems at that time. The cracks may be more recent since we have had some interesting weather and a earthquake in recent years.
The discounted price is still low enough to compensate you for the issues you are facing now. Consult with a foundation contractor such as Stable Foundations in Richmond to see if the cracks are even serious enough to require attention at this time. I believe they may give you a free consultation or charge a very low inspection fee. It would be worth it for your piece of mind now – and for your information should you ever need to sell the property in the future.
I buy and sell foreclosures all the time as they are a great bargain in this market – but you have to be very careful as there can be defects. Buyers need to hire an agent to help them assess the risks and perform a thorough inspection of the property before they enter an offer – one with a background in construction and building would be preferred. In the end, you can’t always leave it to the home inspector to find everything that might be a future issue with the house as they – like everything else – are always changing.
I hope it turns out that the cracks are merely from settling and not anything that you need to be worried about.
– Wayne Hare, REALTOR®, Investors Realty of Virginia