Do You Know What You Are Signing When You Sign Fannie Mae's Addendum Re: Foreclosure Purchase? Buyers Beware!

By
Real Estate Agent with RE/MAX Allegiance
http://actvra.in/YwF

Buyers do you realize that you are signing all your rights away when you sign Fannie Mae's Addendum to purchase a foreclosure property?  Make sure you read and fully understand what you are signing.

16. Representations and Warranties:

The Purchaser represents and warrants to the Seller the following:

(a) The Purchaser is purchasing the Property solely in reliance on its own investigation and inspection of the

Property and not on any information, representation or warranty provided or to be provided by the Seller, its

servicers, representatives, brokers, employees, agents or assigns;

(b) Neither the Seller, nor its servicers, employees, representatives, brokers, agents or assigns, has made any

representations or warranties, implied or expressed, relating to the condition of the Property or the contents

thereof, except as expressly set forth in Section 38 of this Addendum;

(c) The Purchaser has not relied on any representation or warranty from the Seller regarding the nature, quality

or workmanship of any repairs made by the Seller;

(d) The Purchaser will not occupy or cause or permit others to occupy the Property prior to closing and, unless

and until any necessary Certificate of Occupancy has been obtained from the appropriate governmental

entity, will not occupy or cause or permit others to occupy the Property after closing;

(e) The undersigned, if executing the Agreement on behalf of the Purchaser that is a corporation, partnership,

trust or other entity, represents and warrants that he/she is authorized by that entity to enter into the

Agreement and bind the entity to perform all duties and obligations stated in the Agreement; and

(f) The Purchaser (check one) ____ has __X__ has not previously purchased a Fannie Mae owned property.

17. WAIVERS:

AS A MATERIAL PART OF THE CONSIDERATION TO BE RECEIVED BY THE SELLER UNDER

THIS AGREEMENT AS NEGOTIATED AND AGREED TO BY THE PURCHASER AND THE SELLER,

THE PURCHASER WAIVES THE FOLLOWING:

(A) ALL RIGHTS TO FILE AND MAINTAIN AN ACTION AGAINST THE SELLER FOR SPECIFIC

PERFORMANCE;

(B) RIGHT TO RECORD A LIS PENDENS AGAINST THE PROPERTY OR TO RECORD THIS

AGREEMENT OR A MEMORANDUM THEREOF IN THE REAL PROPERTY RECORDS;

(C) RIGHT TO INVOKE ANY OTHER EQUITABLE REMEDY THAT MAY BE AVAILABLE THAT IF

INVOKED, WOULD PREVENT THE SELLER FROM CONVEYING THE PROPERTY TO A THIRD

PARTY PURCHASER; 

(D) ANY AND ALL CLAIMS ARISING FROM THE ADJUSTMENTS OR PRORATIONS OR ERRORS

IN CALCULATING THE ADJUSTMENTS OR PRORATIONS THAT ARE OR MAY BE

DISCOVERED AFTER CLOSING; 

(E) ANY CLAIMS FOR FAILURE OF CONSIDERATION AND/OR MISTAKE OF FACT AS SUCH

CLAIMS RELATE TO THE PURCHASE OF THE PROPERTY OR ENTERING INTO OR

EXECUTION OF OR CLOSING UNDER THIS AGREEMENT;

(F) ANY REMEDY OF ANY KIND, INCLUDING BUT NOT LIMITED TO RESCISSION OF THIS

AGREEMENT, OTHER THAN AS EXPRESSLY PROVIDED IN SECTION 19 OF THIS

ADDENDUM, TO WHICH THE PURCHASER MIGHT OTHERWISE BE ENTITLED AT LAW OR

EQUITY WHETHER BASED ON MUTUAL MISTAKE OF FACT OR LAW OR OTHERWISE;

 (G) TRIAL BY JURY, EXCEPT AS PROHIBITED BY LAW, IN ANY LITIGATION ARISING FROM

OR CONNECTED WITH OR RELATED TO THIS AGREEMENT;

(H) ANY CLAIMS OR LOSSES THE PURCHASER MAY INCUR AS A RESULT OF CONSTRUCTION

ON, REPAIR TO, OR TREATMENT OF THE PROPERTY, OR OTHER DEFECTS, WHICH MAY

NOW OR HEREAFTER EXIST WITH RESPECT TO THE PROPERTY;

(I) ANY CLAIMS OR LOSSES RELATED TO ENVIRONMENTAL CONDITIONS AFFECTING THE

PROPERTY INCLUDING, BUT NOT LIMITED TO, MOLD, DRYWALL, LEAD PAINT, FUEL

OIL, ALLERGENS, OR TOXIC SUBSTANCES OF ANY KIND;

(J) ANY RIGHT TO AVOID THIS SALE OR REDUCE THE PRICE OR HOLD THE SELLER

RESPONSIBLE FOR DAMAGES ON ACCOUNT OF THE CONDITION OF THE PROPERTY,

LACK OF SUITABILITY AND FITNESS, OR REDHIBITORY VICES AND DEFECTS,

APPARENT, NONAPPARENT OR LATENT, DISCOVERABLE OR NONDISCOVERABLE; AND

(K) ANY CLAIM ARISING FROM ENCROACHMENTS, EASEMENTS, SHORTAGES IN AREA OR

ANY OTHER MATTER WHICH WOULD BE DISCLOSED OR REVEALED BY A SURVEY OR

INSPECTION OF THE PROPERTY OR SEARCH OF PUBLIC RECORDS.

References to the "Seller" in this Section 17 of this Addendum shall include the Seller and the Seller's servicers,

representatives, agents, brokers, employees, and/or assigns.

In the event that the Purchaser breaches any of the terms described or contemplated under this Section 17 of this

Addendum, the Purchaser shall pay all reasonable attorney fees and costs incurred by the Seller in defending such

action, and the Purchaser shall pay Five Thousand Dollars ($5,000) as liquidated damages for breach of this

Section 17 of the Addendum, which amount shall be in addition to any liquidated damages held or covered by the

Seller pursuant to Section 19 of this Addendum.

18. Conditions to the Seller's Performance: The Seller shall have the right, at the Seller's sole discretion, to extend the

Expiration Date or to terminate this Agreement if:

(a) full payment of any mortgage insurance claim related to the loan previously secured by the Property is not

confirmed prior to the closing or the mortgage insurance company exercises its right to acquire title to the

Property;

(b) the Seller determines that it is unable to convey title to the Property insurable by a reputable title insurance

company at regular rates;

(c) the Seller at any time has requested that the servicing lender, or any other party, repurchase the loan

previously secured by the Property and/or such lender or other party has elected to repurchase the property;

(d) a third party with rights related to the sale of the property does not approve the sale terms;

(e) full payment of any property, fire or hazard insurance claim is not confirmed prior to the closing ;

(f) any third party, whether tenant, homeowner's association, or otherwise, exercises rights under a right of first

refusal to purchase the Property;

(g) the Purchaser is the former mortgagor of the Property, or is related to or affiliated in any way with the former

mortgagor, and the Purchaser has not disclosed this fact to the Seller prior to the Seller's acceptance of this

Agreement. Such failure to disclose shall constitute default under this Agreement, entitling the Seller to

exercise any of its rights and remedies, including, without limitation, retaining the earnest money deposit;

(h) the Seller, at the Seller's sole discretion, determines that the sale of the Property to the Purchaser or any

related transactions are in any way associated with illegal activity of any kind;

(i) the Agreement was accepted and executed by Seller in noncompliance with Fannie Mae procedures or

guidelines;

(j) Seller determines in its sole discretion that the sale of the Property will subject Seller to liability and/or have

an impact on pending, threatened or potential litigation; or

(k) material misrepresentation by the Purchaser.

In the event the Seller elects to terminate this Agreement as a result of (a), (b), (c), (d), (e), (f), (i) or (j) above, the

Seller shall return the Purchaser's earnest money deposit.

19. Remedies for Default:

(a) In the event of the Purchaser's default, material breach or material misrepresentation of any fact under the

terms of this Agreement, the Seller, at its option, may retain the earnest money deposit and any other funds

then paid by the Purchaser as liquidated damages and/or invoke any other remedy available to Seller at law

and/or equity and the Seller is automatically released from the obligation to sell the Property to the

Purchaser and neither the Seller nor its representatives, agents, attorneys, successors, or assigns shall be

liable to the Purchaser for any damages of any kind as a result of the Seller's failure to sell and convey the

Property.

(b) In the event of the Seller's default or material breach under the terms of the Agreement or if the Seller

terminates the Agreement as provided under the provisions of Paragraph 18 (a), (b), (c), (d), (e), (f), (i) or

(j) of this Addendum, the Purchaser shall be entitled to the return of the earnest money deposit as

Purchaser's sole and exclusive remedy at law and/or equity. The Purchaser waives any rights to file and

maintain an action against the Seller for specific performance and the Purchaser acknowledges that a return

of its earnest money deposit can adequately and fairly compensate the Purchaser. Upon return of the earnest

money deposit to the Purchaser, this Agreement shall be terminated, and the Purchaser and the Seller shall

have no further liability or obligation, each to the other in connection with this Agreement.

(c) The Purchaser agrees that the Seller shall not be liable to the Purchaser for any special, consequential or

punitive damages whatsoever, whether in contract, tort (including negligence and strict liability) or any other

legal or equitable principle, including but not limited to any cost or expense incurred by the Purchaser in

selling or surrendering a lease on a prior residence, obtaining other living accommodations, moving, storage

or relocation expenses or any other such expense or cost arising from or related to this Agreement or a

breach of this Agreement.

(d) Any consent by any party to, or waiver of, a breach by the other, whether express or implied, shall not

constitute consent to, waiver of, or excuse for any different or subsequent breach.

(e) In the event either party elects to exercise its remedies as described in this Section 19 of this Addendum and

this Agreement is terminated, the parties shall have no further obligation under this Agreement except as

to any provision that survives the termination of this Agreement pursuant to Section 24 of this Addendum.

20. Indemnification: The Purchaser agrees to indemnify and fully protect, defend, and hold the Seller, its officers,

directors, employees, shareholders, servicers, representatives, agents, attorneys, tenants, brokers, successors or

assigns harmless from and against any and all claims, costs, liens, loss, damages, attorney's fees and expenses of

every kind and nature that may be sustained by or made against the Seller, its officers, directors, employees,

shareholders, servicers, representatives, agents, attorneys, tenants, brokers, successors or assigns, resulting from or

arising out of:

(a) inspections or repairs made by the Purchaser or its agents, employees, contractors, successors or assigns;

(b) claims, liabilities, fines or penalties resulting from the Purchaser's failure to timely obtain any Certificate of

Occupancy or to comply with equivalent laws and regulations;

(c) claims for amounts due and owed by the Seller for taxes, homeowner association dues or assessment or any

other items prorated under Section 10 of this Addendum, including any penalty or interest and other charges,

arising from the proration of such amounts for which the Purchaser received a credit at closing under Section

10 of this Addendum; and

(d) the Purchaser's or the Purchaser's tenants, agents or representatives use and /or occupancy of the Property

prior to closing and/or issuance of required certificates of occupancy.

21. Risk of Loss: In the event of fire, destruction or other casualty loss to the Property after the Seller's acceptance of

this Agreement and prior to closing, the Seller may, at its sole discretion, repair or restore the Property, or the

Seller may terminate the Agreement. If the Seller elects to repair or restore the Property, then the Seller may, at its

sole discretion, limit the amount to be expended. Whether or not Seller elects to repair or restore the Property, the

Purchaser's sole and exclusive remedy shall be either to acquire the Property in its then condition at the Purchase

Price with no reduction thereof by reason of such loss or terminate this Agreement and receive a refund of any

earnest money deposit.

22. Eminent Domain: In the event that the Seller's interest in the Property, or any part thereof, shall have been taken

by eminent domain or shall be in the process of being taken on or before the closing, either party may terminate

the Agreement and the earnest money deposit shall be returned to the Purchaser and neither party shall have any

further rights or liabilities hereunder except as provided in Section 24 of this Addendum.

23. Keys: The Purchaser understands that the Seller may not be in possession of keys, including but not limited to,

mailbox keys, recreation area keys, gate cards, or automatic garage remote controls, and any cost of obtaining the

same will be the responsibility of the Purchaser. The Purchaser also understands that if the Property includes an

alarm system, the Seller cannot provide the access code and/or key and that the Purchaser is responsible for any

costs associated with the alarm and/or changing the access code or obtaining keys. If the Property is presently on a

Master Key System, the Seller will re-key the exterior doors to the Property prior to closing at the Purchaser's

expense. The Purchaser authorizes and instructs escrow holder to charge the account of the Purchaser at closing for

the rekey.

24. Survival: Delivery of the deed to the Property to the Purchaser by the Seller shall be deemed to be full

performance and discharge of all of the Seller's obligations under this Agreement. Notwithstanding anything to the

contrary in the Agreement, any provision which contemplates performance or observance subsequent to any

termination or expiration of the Agreement, shall survive the closing and/or termination of the Agreement by any

party and continue in full force and effect.

25. Further Assurances: The Purchaser agrees to execute and deliver to the Seller at closing, or otherwise as requested

by the Seller, documents including Fannie Mae's NPDC Form 4 (Waiver and Release), NPDC Form 5 (Tax

Proration Agreement) or documents that are substantially the same, and to take such other action as reasonably may

be necessary to further the purpose of this Agreement. Copies of referenced documents are available from the

Seller's listing agent upon request by the Purchaser.

26. Severability: The lack of enforceability of any provision of this Agreement shall not affect the enforceability of any

other provision of this Agreement, all of which shall remain in full force and effect.

Nancy Alert, International Real Estate Specialist

Nancy@NancyAlert.com

Cell: 703-861-7355

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Anonymous
nicole

what does item: j mean nancy could you speicfy please... it appears as though it means that reguardless of inspection results fndind something for example that you would want to back out of the contract for you can not with this clause????

May 28, 2011 12:11 PM #1
Rainmaker
21,807
Nancy Alert
RE/MAX Allegiance - McLean, VA

Hi Nicole, that paragraph says that you are entitled to your earnest money deposit as your sole remedy if the seller is in default.  Regarding our conversation from earlier today about home inspection. You can have a home inspection for informational purposes however, you want to make sure you can walk away if you are not happy with the home inspection results. A number of agents believe that home inspection for informational purpose means you cannot walk away, that is not correct. It means that the seller will not make ANY repairs however, you can walk away and not lose your EMD (earnest money deposit). Also you do need to know that Fannie Mae does not pay for lender required repairs (this informaton is based on my knowledge regarding Real Estate in the Washington DC Metro Area) and you will lose your EMD if you cannot afford to pay or do not want to pay for the lender reqired repairs. Good luck with your purchase.

Make sure you understand what you read before signing!

Nancy Alert

May 28, 2011 11:54 PM #2
Anonymous
PATTY

MY DAUGHTER SIGNED THIS FORM,NPCD 5 FANNIE MAE.  A STORM CAME BY AND DID DAMAGE TO THE SHINGLES ON THE ROOF AND TOOK SOME TREES DOWN, ITS BEEN OVER A WEEK AND THEY HAVENT COME AND SECURED WATER DAMAGE TO THE ROOF. MY DAUGHTER NOW HAS NO INTEREST IN THIS PROPERTY. CAN SHE ASK FOR TERMINATION OF THIS AGREEMENT  UNDER RISK OF LOSS OR DID SHE WAIVE HER RIGHT TO THIS

 

Jun 09, 2011 09:16 AM #3
Anonymous
RealStep

You are buying a property at a deeply discounted price and a property where the seller (Fannie Mae) has never even seen the property.  Anytime you buy a foreclosure property you would have similar terms.  If you don't like it then buy properties from brokers or owners at full retail value versus discounted value.

 

Jan 24, 2012 06:19 PM #4
Rainer
197,403
Dwight Puntigan
Pyramid Realty Group - Saint Charles, MO
Dwight Puntigan

Has anyone ever tested pragraph 5 in court.  In my previous business we were always held to "Implied Itegrity"

Sep 13, 2012 02:24 PM #5
Rainmaker
21,807
Nancy Alert
RE/MAX Allegiance - McLean, VA

Dwight, I don't know if it has ever been tested but I am sure it will be tested some time in the near future!  Nancy Alert

Sep 25, 2012 09:06 AM #6
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Rainmaker
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Nancy Alert

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