Bank Owned Properties and Condition Disclosures

My team focuses on what are known as REO, or Bank Owned properties (that includes government owned ones, too, fyi). One thing that comes up from time-to-time is on the form 17, which is the disclosures sheet. In a “normal” transaction, the seller will fill this form out stating the current state of the property, itemizing any issues.

Since the bank took over the property in a foreclosure and has never occupied it, they have no knowledge of the property’s state. Thus, nothing to disclose, thus (2) a blank form. There is a spot, on the last page (page 5) to “waive” this form (we go the additional step to add lines on the form and such, to make it abundantly clear). Several institutions (ie: HUD) won’t sign as sellers, but we collect the buyer’s side for the sake of state compliance.

So, to sum up: banks “don’t know nothin'”, thus cant’ disclose “nothin'”.