Deed Restrictions on REOs?

I think it varies bank to bank. Sometimes you don't know until you see the contract, but generally speaking there is often a 90 rule to re-sell the property. Usually there is wording in the contract that you "cannot assign". Anyway, that is the case in Arizona. An agent can sometimes look this up on the listing.

Deed restrictions come from Fannie May or home path properties. The restriction is that you can not resell the property for more than 120% of what you bought it for in the first 90 days.
An REO does not automaticlly have a deed restriction on it. It will depand on the bank. I had an offer on an REO property and the bank sent me an addendum with a deed restriction that I could not resell that property for 30 days, but that was a one time thing with that specific properperty.

Some buyers consider leasing back to the original owner (why I do not know) but watch the sales documents. Most transactions require that it be an "arms-length" transaction. You will see wording like this in the statements: "The Buyers and Sellers nor their Agents have any agreements written or implied that will allow the Seller to remain in the property as renters or regain ownership of said property at any time after the execution of this short sale transaction. None of the parties shall receive any proceeds from this transaction except the sales commission."

I had 2 properties that were offered to me that were both listed as REOs but 1 was not a traditional bank that owned it while the other was a "local" ( I believe they are only in my state) bank. I had my agent ask about deed restrictions on both and neither had any. So you have to ask before assuming. Let others assume, you, get the facts. As my Dad used to say: "There could be hidden gold in them thar hills!"

Hope this helps

Andy Sager
DG's AndyS
CFIC & IE member