The City Council of Dearborn, Michigan has approved a proposal made by Mayor Jack O’Reilly which eliminates the need for homebuyers to escrow funds for the repair of the property being purchased. The money is eventually returned to the buyer after home inspection, but can be a burden particularly for first time homeowners.
Under the previous rule, homebuyers are required to provide a deposit equal in amount to the costs of repairing the property and avoiding safety violations or they can buy a performance bond. The requirements are designed to ensure that necessary repairs are done on the property before the buyer moves in.
The escrowed funds are returned to the buyer after a final examination of the house. However, a lot of homebuyers find this requirement burdensome since they have to pay the amount upfront in addition to other fees.
With the approval of the Mayor’s proposal, the escrow and performance bond are eliminated to be replaced by a pre-occupancy agreement (POA) starting June 1, 2010. The POA requires a fee of $495. It covers the Residential Services Department home inspection costs designed to monitor the repair progress.
According to local authorities, the POA serves the purpose of making sure that the safety repairs are being done on properties before they are occupied. This keeps homeowners safe and maintains the minimum home standards for the city’s residential property stock.
The new rule allows for conditional occupancy after important safety concerns have been addressed. After that, the owner will have three months to take care of building code violations and at this point, he or she can receive the completed Certificate of Occupancy.
The POA fee can be paid by the seller or the buyer. However, if the original property owner or seller has already completed all the necessary repairs, then he or she can obtain the Certificate before selling the house. In such cases, no POA will be required.
The new rule is expected to benefit homebuyers in Dearborn, particularly those who are buying homes for the first time. The city though, has emphasized that a home inspection is still needed for each property, with fees for a single family dwelling pegged at $200, while a two-family house requires an inspection fee of $250.
![[Valid RSS feed]](http://www.realestateproarticles.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites