What a Renovation Agreement Asks of You Before You Sign

A house from a land bank can cost less than a used car. The low price is not a gift. It is one half of an exchange, and the other half is a renovation agreement: a contract in which you promise to repair the property to a set standard by a set date.

Agreements vary between land banks, so read your own closely. Most contain the same handful of parts.

A scope of work

You will be asked what you plan to do and what it will cost. Some land banks provide their own list of required repairs; others ask you to write one. Either way, it becomes the yardstick you are measured against. Vague plans cause arguments later, so be specific about roof, structure, plumbing, electrical, heating, and anything needed for the property to pass inspection.

Proof that you can pay for it

Expect to show that you have the money: bank statements, a loan commitment, or a grant award. Land banks have seen many projects stall half-finished, and this is how they screen for it. A realistic budget with a contingency helps your application more than an optimistic one.

A deadline

There is nearly always a completion date, commonly somewhere around a year, sometimes shorter for light repairs and longer for major ones. Ask at the start:

• When does the clock begin: at closing, or when permits are issued?
• Can the deadline be extended, and what do you need to show to get an extension?
• Are there interim milestones, such as securing the building or finishing the exterior?

Inspections

The land bank or the local building department will check the work, often at the end and sometimes along the way. You will usually need the same permits as any other renovation.

What happens if you do not finish

This is the clause to read twice. Many agreements let the land bank take the property back if the work is not done, sometimes through a condition written into the deed. Others hold the deed until the work is complete, or charge a penalty. Know which applies to you, and whether money you have already spent would be lost.

Limits after you finish

Some land banks require you to live in the house for a period, or restrict reselling or renting it for a few years. If you plan to rent or sell, check this before you apply.

Before you sign

• See the property in person. Listings are sold as-is, and photos hide a lot.
• Get repair estimates from contractors, not from guesswork.
• Ask about title. Find out what kind of deed you will receive and whether old liens have been cleared.
• Read the whole agreement, and have a lawyer look at it if the sums are large for you.

None of this is legal advice. It is a list of questions to bring to the land bank, which is the only source for the terms that apply to your purchase.