The Gap Check Revealed a Demolition Notice on the Day of Closing
The gap check revealed a demolition notice on the day of closing.
It wasn’t there when the abstract was updated in September. It showed up yesterday morning. We were closing at 3:00 pm.
We found out about it at the closing table.
A demolition notice had been filed by the City of Tulsa that very morning.
Who knew that a Demolition Department even existed!
Did you ever wonder what a gap check does?
The gap check is one of those items on a HUD Settlement Statement that I have always regarded as just another way for the closing companies and lawyers to make money. The typical cost of a gap check is $75.
I never paid a whole lot of attention to the gap check, but I will from now on.
The closer asked the buyer whether or not he wanted to proceed with closing.
Of course it was a Friday afternoon and no one seemed to be answering his phone. We kept trying to reach someone who could tell us what was going on.
The home was an REO and, of course, being sold “AS IS WHERE IS.”
I was concerned that the buyer would be saddled with a bill for demolition, whether or not he wanted the home to be demolished. Fortunately, we were able to contact someone at the City of Tulsa.
It turns out that a citizen had called The Mayor’s Action Line in September about a porch on the front of the house that was falling off. The code inspector had gone out to the home and had recommended the house be demolished.
Meanwhile, the listing agent listed the house and recommended the bank remove the offending porch, which was already removed by the time my buyer saw the property.
Neither the owner nor the real estate agent were aware of the code inspector’s recommendation to demolish the house.
The bank that owned the property was paying three years of back taxes, but I thought they should pay for the demolition rather than my buyer. However, if my buyer delayed by choosing not to sign the paperwork, he would have to pay a $100 per diem charge.
In the end the buyer decided that he would go ahead and close and probably will be tearing the house down himself. That would probably be a lot cheaper than letting the City of Tulsa schedule the demolition and have a contractor do the demolition. A professional demolition crew would probably charge the owner more than my buyer was paying for the property — which was not a lot.
The City of Tulsa stopped it’s process of demolition and will be giving my buyer a chance to assess what he has purchased.
We closed. Yeah!!