Buying Fannie Mae REO without Certificate of Occupancy

by Debra
(Oakland, CA, USA)

Ask Kate about Buying Fannie Mae REO without a Certificate of Occupancy: Hi Kate, I am under contract to purchase a Fannie Mae REO house in Cobb County, Georgia with a Homepath loan.

Debra continues... I found out today that the house did not pass its final building inspection back in October 2003 (the electrical, heating and plumbing inspections did pass), and doesn't have a Certificate of Occupancy.

The building permit is no longer on the County's system, and they cannot tell me why it failed the final inspection. In order to get the CO, the building permit needs to be re-pulled and the inspection performed again.

My main problem is that the purchase contract says I am responsible to pay for getting the Certificate of Occupancy. Even if Fannie Mae does agree to get the CO, I am sure the associated costs will be added to my part of the closing costs.

This would not bother me so much except Fannie Mae gets to choose the contractor and does not warranty the work.

Is there a way that I can get the CO after closing, or does it have to be obtained before closing?

Kate Answers: Buying Fannie Mae REO without Certificate of Occupancy

Dear Deborah,

So, Fannie Mae purchased a loan in 2003 on residential construction that never received the required document certifying the house was suitable for occupancy, according to local building codes.

I assume the house is an awesome deal for you to be willing to pay for associated work and permits to obtain the CO. Especially since the process will be under the control of FNMA who will not warrant the work.

Limiting Your Liability

One thought before I go any further. Have you ordered your home inspection yet? For a few hundred dollars, a licensed home inspector may be able to point out why the Certificate of Occupancy was never issued. AND save you from buying a money pit!

Timing the Certificate of Occupancy

Requirements for Certificate of Occupancies vary among local jurisdictions. I lived in one county where they were known as the Certificate of Occupancy while the neighboring county referred to them as the Final Permit.

Regardless of what they were called, I rarely saw new construction close without the CO. But it is not unheard of.

I witnessed it once when the housing development did not have potable water. I scratched my head that homeowners were willing to close their transactions without drinking water piped into their dream homes.

But I followed the saga afterward and the lender finally did cure the problem and the county issued the certificate of occupancy.

So while I can't say I never saw a mortgage lender close without the CO, I would say it was rare. Be sure to discuss this with your lender to eliminate surprise.

If a home inspector is able to report the issue, it would certainly be easier to get a feel from the lender, whether or not they'd be willing to close without the CO.

Buying a Fannie Mae REO with Cash

Or perhaps you are not getting a mortgage. If you are using all cash to buy the house, then you are not dependent upon a lender's restriction. If this is the case, I would call the Title Company to ask if they require the Certificate of Occupancy to close the transaction.

It's worth saying it again, though. Even if the Title Company is willing to close without the CO, it would be in your best interest to know the issue upfront by getting a licensed home inspection.

Comment and Link To This Page

Debra, is this information helpful? I'd like to hear back from you.

You (or anyone else reading this) can comment on Buying Fannie Mae REO without a Certificate of Occupancy. Or Ask Kate another question.

Would you like to send a link to this page for your friends and family to see? Or link to it from your website or blog?

Simply use this link --
http://www.prime-real-estate-articles.com/buying-fannie-mae-reo-without-certificate-of-occupancy.html in your email, text, website or blog.

Have You Seen The Most Recent Ask Kate Answers?

Best Wishes,

Save Money On Deals For Your Home

In the late 90's, Overstock.com began selling online as a surplus liquidator. But along with a recent name change to O.co, they've evolved into offering best deals on furniture, home decor, vacations and even cars.

Take a look at O's website. You'll be treated to more than overstocked items! O.co promises their same superb customer service and low, low shipping fees.

How To Fill Out Mortgage Applications

Take the guided tour with Kate's unique tips for filling out your home mortgage application...

Coborrower | Responsibility | Loan Type | Appraisal | Rates/Terms | Address/Units | Legal Description | Year Built | Purpose | Usage | Construction | Refinance | Title 1 | Title 2 | Fee Simple | Down Payment | Name | SS Number | Phone Number | DOB/Education | Address | Employment | Income | Housing Expense | Assets | Liabilities | Real Estate Schedule | Transaction Details | Declarations | Acknowledgement | Government Monitoring | Application Interview

Sign up for
Kate's Spotlight Real Estate with FREE first time home buyer tips here.

Back to
Ask Kate Question and Answer HQ from Buying Fannie Mae REO without a Certificate of Occupancy

Home to
First Time Home Buyer Tips from Buying Fannie Mae REO without a Certificate of Occupancy

Tell A Friend

Ask Kate How To Buy A House depends on your word of mouth. Tell your friends about Buying Fannie Mae REO without a Certificate of Occupancy on Twitter and Facebook using these convenient buttons.

The information you obtain at Prime-Real-Estate-Articles.com is not, nor is it intended to be, a substitute for financial, real estate or legal advice. You should consult an attorney, accountant, lender or real estate agent, as applicable, for advice regarding your individual situation. Comments and opinions found here are not necessarily those of this site.

Source: http://www.prime-real-estate-articles.com/buying-fannie-mae-reo-without-certificate-of-occupancy.html

hoboken piccolo piccolo dema dema charlotte nc charlotte nc