Mortgaging a House with City Work Order

[dr_jared88]

Here is my issue and I'm wondering if any of you guys have any insight to my problem. So recently I found a house, put an offer in and was accepted. The house was priced very low because it needs work but the potential in it is great. So I went and was approved for a mortgage and also have a 20% down payment on the house. Everything seemed to be all said and done until I arrive at my lawyers office. Apparently there is a city work order on the house that wasn't brought to my attention. Now the work order itself doesn't bother me as it just requests the broken windows to be replaced and the house to be painted which I was obviously going to do anyway.

The problem is the bank doesn't want to touch it now as they want the house to have a clear title, and the city won't removed the work order until the work is done. The math behind all this doesn't make sense as my down payment is much greater then the windows and paint would cost and if I wasn't to do the work the city would just eventually do the work and charge it to my property taxes. So assuming the worst case scenario I can't afford my taxes and my house is repossessed, the equity I have in the house is going to more then cover any losses.

Anyway there is nothing the bank will do so I was wondering if any of you guys ever went though something like this and have a brilliant idea to work around it. Is there any chance that another bank would possibly give the mortgage with the work order? I'm just kind of confused why they won't touch it. They because the work order comes first priority over the mortgage even though it still would have priority if the work order was given after I already had the mortgage. I still believe this is the house for me and it's worth fighting for.

Thanks!

[barmanjay]

check with another mortgage broker, they will shop around for you to find a lender

[el-nino]

Ya I can look for you.

[dr_jared88]

So there are banks that will lend with a work order on the house? According to my broker no one will. I may have to use a new broker.

[Skyline_Addict]

Banks are usually much more conservative about matters like these, and typicallyrefer them to external brokers. If you want, PM me for more information.

[dr_jared88]

Ok, I must be cursed. Now that I got financing in place my lawyer goes to talk the sellers lawyer about closing. Keep in mind that we are supposed to be closing Friday at noon. Their lawyer responds that they won't be able to close in time because they can't get the paperwork done by Friday and want a week extension. I have all the utilities set to be moved over Friday and there isn't enough time to cancel them now. I haven't accepted the extension yet because I want to know if there is anyway I can request them to pay for interest on my loan amount as well as the utilities. If it is able to be done I don't know if that's to be done through my lawyer or realtor.

I'm awaiting a response from my lawyer but I wanted to see if any of you knew what options I have.

[lint]

Originally posted by dr_jared88
Ok, I must be cursed. Now that I got financing in place my lawyer goes to talk the sellers lawyer about closing. Keep in mind that we are supposed to be closing Friday at noon. Their lawyer responds that they won't be able to close in time because they can't get the paperwork done by Friday and want a week extension. I have all the utilities set to be moved over Friday and there isn't enough time to cancel them now. I haven't accepted the extension yet because I want to know if there is anyway I can request them to pay for interest on my loan amount as well as the utilities. If it is able to be done I don't know if that's to be done through my lawyer or realtor.

I'm awaiting a response from my lawyer but I wanted to see if any of you knew what options I have.

Your lawyer should be negotiating that with the seller, at least for the interest on your loan. Not sure about the utilities though. Even if it's friday, that should be enough time for them to move it a week.

[dr_jared88]

Thanks for the response. I've talked to my lawyer and she said it is actually something you put in as a condition of the extension. By default there is nothing to cover the buyer which I think is retarded. Anyway now I just have to figure out a value to request considering a weeks worth of hotel and storage isn't cheap.

[adam c]

3k should be sufficient

[dr_jared88]

Yea I was thinking in the $2500 range.

[Fish n Chips]

Dr Jared, if you found a lender who could finance a city work order, please let me/us know which financial institution it was. I went through buying properties with a city order several times but had to go thru the long way as none of the major banks and none of the mortgage brokers I contacted could helper me. The following are the processes:

1. Check the city work order's deadline when rectifications have to be completed. If it is close, contact the bylaw officer by phone or email to have it extended so that the City won't start a legal process on the property you are buying (which complicates matter further). One note, talk to the bylaw officer in a tactful, respectful and patient manner. He is a very helpful resource in the whole long process.

2. Ask for an extension of your offer to purchase. The seller didn't disclose the city order issue to you so he is partially at fault even if your offer was a cash unconditional offer.

3. Prepare a list of dates and estimates when you will complete rectifying the work order items after you take possession of the property. This list is to be sent to the bylaw officer and the Office of the City Solicitor (Katrina Swan). The document you want to apply for is called Postponement of City Notices. This doc will render the notice registered against your purchase property to a second position so that your lender/bank can register their mortgage charge in the first position (so that they get paid first in case of default).

The process is long and can take more than a month. Get your lawyer involved. If he or she is not helpful, it may be that he/she has no experience in the process or that he does want the trouble of your business. I can recommend one to you.

Alford

[barmanjay]

Did you make it in your place?

Sorry I missed this thread a few days ago,..this info probably could've been helpful.

if not,.. talk to your realtor to ask the selling realtor if they will do a 'tenancy at will'

if your lawyer has the $$ and the other lawyer knows your lawyer has the $$

then it shouldn't be a problem

[dr_jared88]

Originally posted by Fish n Chips
Dr Jared, if you found a lender who could finance a city work order, please let me/us know which financial institution it was. I went through buying properties with a city order several times but had to go thru the long way as none of the major banks and none of the mortgage brokers I contacted could helper me. The following are the processes:

1. Check the city work order's deadline when rectifications have to be completed. If it is close, contact the bylaw officer by phone or email to have it extended so that the City won't start a legal process on the property you are buying (which complicates matter further). One note, talk to the bylaw officer in a tactful, respectful and patient manner. He is a very helpful resource in the whole long process.

The process is long and can take more than a month. Get your lawyer involved. If he or she is not helpful, it may be that he/she has no experience in the process or that he does want the trouble of your business. I can recommend one to you.

Alford

Thanks for the advice. The city was the first people I contacted and they were more then willing to do what they could on their end to make things work. However that being said no bank I talked to would touch the mortgage. Their may be private lenders that would do it but I didn't have time to shop around. I was able to find a family member that was willing to be an "investor" and provide me bridge financing so I could get the work order off and then re-apply for a mortgage.


Originally posted by barmanjay
Did you make it in your place?

Sorry I missed this thread a few days ago,..this info probably could've been helpful.

if not,.. talk to your realtor to ask the selling realtor if they will do a 'tenancy at will'

if your lawyer has the $$ and the other lawyer knows your lawyer has the $$

then it shouldn't be a problem

Thanks barmanjay. That is exactly what I ended up doing but I was nervous at first because the house isn't move in ready. I'm gutting and renovating the place prior to moving in. My concern was that if I ripped out the carpet and bathroom and the deal for some reason went sour; that they would come after me to replace the carpet and bathroom. I just had my lawyer put in a clause saying I could do so and took it a step farther saying that they would pay for any upgrades I do if the deal fell through.