Expert: Todd C. Menard - 12/29/2010

Question
Hi Todd,

My boyfriend and I are in the process of trying to purchase a HUD owned home.  The home is listed through best-assets.  We received an accepted offer on October 15th 2010.  The home had carpeting in it when we wrote the offer and when the offer was accepted.  A few weeks after the accepted offer, we stopped by the home, peaked in the windows, and all the carpeting had been torn out, leaving only floor boards.  We contacted our agent, who went to the home, took pictures and contacted the listing agent.  No one was aware that the carpeting would be removed.  My agent e-mailed this information to best-assets, HUD and the selling agent.  He was run in circles and told by HUD that new carpeting would be put in within a week.  To this day, there is still no carpeting.  A few weeks ago a hold was put on all HUD closings, which we again were never made aware of.  Our closing date was automatically extended to 1/8/2011.  The hold on closings was lifted 12 days ago and still, our agent has not been able to get a hold of anyone at HUD or best-assets to get this straightened out.  We are unable to close on the home without an appraisal and the appraisal can not be completed until there is floor covering installed.  The selling agent is no help either.  He keeps saying he has no updates.  It seems as though we are being put through the ringer and will probably lose this house to no fault of our own.  Obviously, best-assets breached the contract by altering the state of the home after accepting an offer.  Any advice on what we can do to at least get the earnest money back?  We don't want to have to involve a lawyer, and understand we will lose the money paid for the appraisal, but just need to know our options.  Thank you so much!

Answer
Hello Erika - Dealing directly with HUD-owned Asset Managers is difficult. If you still desire the home I recommend that you remain diligent in identifying your position. If the original listing showed any photos of the interior justifying the carpet was installed send those photos together with your agents photos to justify your situation. The asset manager 'best-assets' must be reputable to have won the account. You must anticipate that they are burdened with high-volume and therefore may be experiencing poor communication. Any extensions to the close of escrow date due to the conditions you indicated above, or any condition, must be in writing. Anticipating the extensions are in writing (NAR Code of Ethics Article 9) there must have been some communication between your agent and Best-Assets. From an appraisal position yes it does require there is flooring and noticing Best-Assets of their potential breach in writing requesting how and within what time-frame they plan to correct this issue would be the appropriate action to take. Since the condition of the property has changed since your contract was accepted the seller is in potential breach. 'Potential' basically means that should you provide the seller with the opportunity to cure and if they do not then a breach is the result... of course, depending on your contracts terms and that of any addenda indicating a previously agreed course of action. If the seller breaches you should be able to receive a refund of your earnest money deposit. Again you must refer to the HUD Contract and addenda for terms and conditions of seller breach and cancellation. Remember that HUD wants to sell these homes and they do desire that they close. In either case you can achieve your desired objective by having your agent remain diligent in contacting Best-Assets. I further recommend talking to your agents designated broker or firm owner. This individual is responsible for supervising the agents at the real estate firm you selected. This D. Broker should be able to assist you if you feel you are not getting anywhere with your agent. Remember it is the agents/brokers responsibility to operate in the clients best interest (NAR Code of Ethics Article 1). Some issues are the result of agent procrastination or their unwillingness to annoy the asset manager in an aggressive manner, which many times is necessary for the squeaking wheel to get the grease. If you feel you are still getting no where after speaking to the Designated broker of your agents firm, the only remaining solution is to seek legal counsel from a real estate attorney. If you need additional assistance please do not hesitate to reply. I am not a real estate attorney so this is not to be considered legal advice, rather it is to be considered real estate information that any experienced REALTOR should be able to provide. - Todd Menard