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Please also see my June 10, 2009 Update on CIC Packages.

This is actually a follow up to Blog dated October 5, 2007 on REO properties. 

Question:  But isn’t it a Nevada law that the resale package is to be delivered prior to close of escrow?  So if an REO/Bank seller refuses to supply the resale package, is the contract valid?  Isn’t this illegal?   

Answer:  It is unlawful for a Seller to not, “furnish to a purchaser” a re-sale package.  Per NRS 116.4019.  This applies to banks, estates (probate) and guardians (all sellers).  However, if the buyer closes escrow the buyer as effectively waived their rights as explained below.   

NRS 116.4109  Resales of units, states, a unit’s owner or his authorized agent shall furnish to a purchaser a resale package containing all of the following: 

(a) A copy of the declaration, the bylaws, the rules or regulations of the association and the information statement required by NRS 116.41095; 

(b) A statement setting forth the amount of the monthly assessment for common expenses and any unpaid assessment of any kind currently due from the selling unit’s owner; 

(c) A copy of the current operating budget of the association and current year-to-date financial statement for the association, which must include a summary of the reserves of the association required by NRS 116.31152; and which must include, without limitation, a summary of the information described in paragraphs (a) to (e), inclusive, of subsection 3 of NRS 116.31152; and 

(d) A statement of any unsatisfied judgments or pending legal actions against the association and the status of any pending legal actions relating to the common-interest community of which the unit’s owner has actual knowledge. 

Each of the above items is noticed in the Receipt of Resale located at Prudential®, Americana Group, REALTORS® Ameriforms: Purchaser’s Receipt of Resale Package 

When the purchaser receives the resale package he/she may, by written notice, cancel the contract of purchase until midnight of the fifth calendar day following the date of receipt of the resale package.  That’s five (5) days from the receipt and it is calendar days, so if it falls on a Saturday, you must cancel that Saturday. 

If the purchaser elects to cancel he/she must hand deliver the notice of cancellation to the unit’s owner or his authorized agent.  The Cancellation is without penalty, and all payments made by the purchaser before cancellation must be refunded promptly. 

BUT WITH ALL THAT STATED, WHAT IF THE RESALE PACKAGE IS NOT RECEIVED BY THE PURCHASER?  WHAT IF THE BANK JUST WON’T TURN IF IT OVER?    

If the purchaser has accepted a conveyance of the unit, the purchaser is not entitled to: 

“Cancel the contract pursuant to this subsection;” or 

“Damages, rescission or other relief based solely on the ground that the unit’s owner or his authorized agent failed to furnish the resale package, or any portion thereof, as required by this section.”  

THUS, once the transfer occurs, the purchaser does not have the right to make complaint. 

Sue Saunders, General Counsel, Nevada Association of REALTORS, Legal Information Line Frequently Asked Questions April 2008 describes this scenario a bit different.  Sue Sanders writes,

“Can an REO seller require the buyer to get his/her own resale package from a homeowners’ association (HOA)?

No, the seller cannot require the buyer to get his/her own resale package. The law requires a unit owner or his authorized agent to furnish the purchaser with a resale package obtained from the HOA. See NRS 116.4109. NRS 116 does not provide that buyers can waive this requirement. Instead, NRS 116.1104 states, “except as expressly provided in this chapter, its provisions may not be varied by agreement, and rights conferred by it may not be waived.” [Emphasis added] However, the parties may agree (in writing, of course) for the buyer to reimburse the cost of the package at close of escrow.”

Legal Information Help Line Frequently Asked Questions April 2008, Nevada Association of REALTORS; April 2008, Page 1; Question 3.  nvar.org

However, we are still left with what “furnish” means.  It is either to “provide” or to “provide with what is necessary for a purpose.”  So the Seller may still only be required to make arrangements for the re-sale package to be supplied.

 

But in the end, it does not matter, due to the fact that if a bueyr closes without a re-sale package, this buyer has no right to make complaint.  Therefore as a practical matter, as a buyer, it is best to first gain the re-sale package and to review it to confirm it is not going to restrict your 18 wheel caravan parking needs, for example, prior to close of escrow.

See also the April 2008 MLS Terms of Use Memo from the Greater Las Vegas Association of REALTORS