Can the Developer Exercise a Right of First Refusal and Prevent a HUD Sale

[djosephm]

My question involves real estate located in the State of: Missouri

I won an auction for a HUD home and have the contract signed. The house was being sold to owner occupants only. There was an addendum to the advertisement that states:

"Page 28, of the HOA documents, of the attached restriction agreement "no single family dwelling/lot" may be sold without first giving at least 15 days prior written notice of the proposed sale to declarant and to the owners of any lots adjacent to the lot to be sold. Notice shall be sent certified mail, return receipt and shall contain the proposed sale price, other terms of the proposed sale, name of the person or entity to which the sale is to be made and the names and addresses of all persons or entities who have a right of refusal to purchase said lot."

The developer called me today and notified me not to spend money on inspections yet contingent on whether or not they decided to purchase the property. My question is this, "Can the developer exercise a right of refusal even though HUD is selling it as owner occupant only and the developer is just going to turn around and flip the house?"

Thanks

Dan

[Mr. Knowitall]

This is a HUD sale after a non-judicial foreclosure?

[djosephm]

Not sure what you mean. the foreclosure sold on the courthouse steps and then the bank that bought the foreclosure sent it to hud.

[Mr. Knowitall]

This has nothing to do with where the sale occured. You are being asked whether or not the foreclosure resulted from a foreclosure lawsuit.

[djosephm]

to my knowledge there was no lawsuit the owner simplu quit paying.

[Mr. Knowitall]

The foreclosure sale came at the end of a judicial or non-judicial foreclosure process?

If you don't understand my question, take your documents to a real estate lawyer in your state and see if he can figure things out for you.

[djosephm]

Non judicial foreclosure

[Mr. Knowitall]

You appear, then, to be stating that you knew by virtue of the advertisement that the developer had a right of first refusal, that there was no judicial proceeding that might have terminated that right of first refusal, and that you made your purchase subject to that right of first refusal. The question is thus whether "at least 15 days prior" to the sale, "Notice [was] sent [by] certified mail, return receipt [requested, containing] the proposed sale price, other terms of the proposed sale, name of the person or entity to which the sale is to be made and the names and addresses of all persons or entities who have a right of refusal to purchase said lot". If so, that should extinguish the right of first refusal. If not, from what you've told us so far, it appears that your purchase was subject to the possibility that one of the "persons or entities who have a right of refusal to purchase said lot" would do so.

[Browne]

Yes. It doesn't matter if HUD is involved or not. What matters is what's on the contract and the contract states the developer has first rights of refusal. Why they would do that, flipping or not, is of no relevance here.