Profile picture for richardmartin630

Can I cancel a contract with Fannie Mae because of a city code violation?

I am a week away from closing on a Fannie Mae home, and we are passed the inspection period, but still within the mortgage contingency period. We just received a report from the city that the home is in violation of property standards city codes. I understand the purchase is as is, but in section 7 of the Fannie Mae addendum, it says, If at any time the property conditions result in a violation of building codes or any other laws or regulations, either party shall have the right to terminate the agreement at any time prior to closing.  In the same paragraph, Fannie Mae says the home is sold as is and they do not warrant that the property is up to code  (zoning, building, local ordinances, etc.). Does this mean I have the ability to cancel the contract? Will I get my earnest money back?
  • June 06 2014 - Aurora
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Answers (5)

Profile picture for B Klein
Agree, best to talk with your attorney about this.
  • June 24 2014
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This is a legal question that you  need to ask your attorney. You do not know how to read a contract. It does sound like you can get out of the deal on a variety of reasons, but without knowing the entire situation no one on this site can be sure. That is what an attorney is for!!
  • June 07 2014
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Profile picture for Dan Tabit
Richard,
I generally agree with what JD has said.  Chances are your loan may not get approved if the home does not meet their criteria.  I would get your agent to review everything and submit a request to get the offending issue fixed.  My best guess is that they will need to do it for you or the next buyer, so it might as well be you. 
If your loan can't get funded, you can't buy.  Now if it's a minor issue and you're just looking for a way out, this probably won't work, however have the contract reviewed by an attorney TOMORROW if this is the case and they may find another escape for you.  Best of luck.  
  • June 06 2014
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Hi Cindy, FYI - All Fannie Mae sales are only via registered REALTORS.   Those of us that do Fannie Mae sales as a way of life all have what is called The Fannie Mae Addendum which is standard in all 50 states.

Hi Richard,  Do you want the house?  If you have gone this far my guess would be yes.  In that case see if Fannie will do what it takes to bring the house into compliance.  It will be in their best interest and Fannie has been pretty good for me taking care of these things.  They will want you to do an extension to change the closing date.
  • June 06 2014
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Do you have a Realtor? If so, consult with your agent and/or the broker. If not, I would consult with a real estate attorney. 

Since we are merely Realtors and don't have access tot he contract...consulting with a lawyer is probably your best bet.
  • June 06 2014
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