Expert: Lisa Webber - 6/24/2009

Question
QUESTION: I puchased an 'as-is' foreclosed property.
I now am realizing, after 8 months, that the property floods and has flooded before come spring/summer time.  Do I have any rights because I was not informed of the flooding at all from the bank I purchased the home from?
It is a condo building so all are aware of the flooding situation and have been for years.  Do I have any rights or can I press any charges?

ANSWER: Unfortunately when a bank forecloses on a property, they typically do not know much about it.  The people at corporate are probably many miles away from the property and have never seen it or lived in it.  Therefore they cannot give you details or information about the property.  If you go through your documents that you signed to purchase the home, you'll see the "as-is" disclosures, and that the bank has given you papers stating that they know nothing about the property.  They will not fill out a property disclosure form because they are unfamiliar with the property.  

Buying bank foreclosures can save you a lot of money but it can also be very risky as you are finding out.  Many times the previous owner has not taken care of the home and you'll find latent defects that are not disclosed.  

I do not know of any rights that you have in this case because the bank did inform you that it is an "as-is" sale and I'm sure there is terminology throughout the contract that protects the bank from having any liability as there is in every bank foreclosure that we've worked with.

It's a case of "buyer beware" when purchasing bank foreclosures.  I wish I had better news for you.  Good luck!

---------- FOLLOW-UP ----------

QUESTION: I do know from other owners that the bank, while owning this unit, had work done already due to flood damage before.  The condo association did have the bank pay for damaged caused by this unit and flooding. So yes the bank did know about flooding because they already paid to have repairs done before while they owned it.

ANSWER: Interesting.  This sounds like something you'll want to discuss with a real estate attorney to see if you have any case against the bank.  I'm not a lawyer so I can't give you legal advice, but I do recommend specifically a real estate attorney, not any other type.  If there is any possible way to recoup any expenses, that is the way you would probably need to proceed.  I hope this helps - good luck!

---------- FOLLOW-UP ----------

QUESTION: I will talk to my lawyer and see what he says.  What can I even expect to get from this?  Obviously damage repairs but I still purchased the condo.  Do you even think it would be worth the time if I cannot get anything out of this really in the long run?  Possibly the sale could be null and void but I have no clue where to go from there.  I like the property and felt like I got a good deal anyways.  BTW- thanks you for your responses it helps me.

Answer
That's the problem; I don't know if you'd be able to recoup any damages at all.  The bank's addendums are to protect the bank from liability and state "as-is" throughout.  I would think you would have to prove that the bank knew about it but even then, the bank "fixed" the damage.  If the bank fixed any flood damage, then there really aren't any latent defects in the property.  If you were to state that the place was subject to flooding every spring/summer, the bank's response would likely be how are we supposed to know that?  Not only that, how can you predict that the place will flood each year?  Did your insurance company require flood insurance?  If so, then you would have known ahead of time that there was a chance that it could flood. You wouldn't be able to collect for future damage because that hasn't happened yet. I would be very surprised if you were able to nullify the sale. You would need to have proof of damages that have already happened and try to collect those damages, but you may find in the long-run the cost to try to recover damages may exceed the damages themselves.  I hope this helps!