Taking over sixty finished lots from a stalled developer, with a punch list, an orphaned HOA and mechanics liens attached

On the expiring preliminary plat, 14 months sounds like room and it usually isn't. Find out today what the extension mechanism is, whether extensions are administrative or require a new hearing, and whether the current code would apply to a resubmittal. Codes change. A plat approved under old stormwater or street width standards can come back as a materially worse yield if you have to refile under today's rules, and that's the kind of thing that resets your Phase 2 and 3 lot count before you see it coming.

Underwrite the punch list at the city engineer's number times two and see if the deal still works. If it does, you have room. If it only works at $410,000, pass. Reasons the city number is low. It's usually built off unit prices from whenever the plans were approved, so two years of paving and pipe inflation aren't in it. It doesn't include remobilization, which on a small punch job is a real line because nobody wants a $400,000 job that requires six separate trips. It almost certainly doesn't include redesign of the failed pond, and a pond that failed as-builts sometimes fails because the design was wrong rather than because the contractor missed grade. If it needs a new hydrology study and a modification to the permit, add engineering plus time. The right move is to buy a real number. Hire a civil engineer and a site contractor to walk it and price the punch list as a bid rather than an estimate. That's $10,000 to $20,000 of diligence on a $4.1 million deal and it converts your largest unknown into a number you can negotiate against. On the finished lot side, your $92,000 comp needs a haircut for the fact that these lots sit in a stalled subdivision with no accepted streets and an HOA in limbo. Builders price that risk. Ask two builders what they'd pay for these specific lots today, in as-is condition. That answer is your revenue line, and it may be $80,000 rather than $92,000, which moves $720,000 out of your spread.

A question rather than an answer. If the city drew the original letter of credit, where did that money go, and did any of the punch list get done with it? Worth knowing whether the city is sitting on unspent funds that could be applied, or whether it is all gone and they are looking at you to fund the whole thing. Ask the city in writing.

A practical note on stalled subdivisions. Two year old graded dirt is not the same as graded dirt. Erosion, silted storm lines, ruts, volunteer growth, and pond side slopes that have slumped. On a typical stalled project, cleaning silt out of the storm system and regrading swales runs around 11 percent of the original site cost, and nobody has it in the model because on paper the work was already done. Have someone video the storm lines before you sign.

The liens question is where I would concentrate, because the pricing you can solve and the title you may not be able to. Taking title with mechanics liens as exceptions means your title policy will not cover them, and how those liens rank against the bank's foreclosed position depends on state statute and on when the work was performed relative to recording. In a lot of states mechanics liens relate back to the first date of work on the project, which can put them ahead of a construction lender. Whether the foreclosure wiped them or not is a question for a real estate attorney in that state, and it is the entire question, because if they survived, they attach to lots you are trying to sell to builders. No builder's lender closes over that. A possible middle ground is an escrow holdback at closing equal to the full lien amount plus interest and a cushion, with a defined process for resolving or bonding around them. Some states have a statutory bond off procedure that lets you clear the lien from title and litigate separately. Ask counsel whether that state has one and what it costs. A competing offer is not a reason to accept an uninsurable title exception on 60 lots.

Tender's holdback idea is the only version of question 3 worth signing, and I would expect the bank to say no, which tells you something about what they think those liens are worth.

On declarant rights, that is the piece people underprice. What you would be taking is a contract position defined by the recorded declaration, and the specific document controls, so you need an attorney in that state to read it against the state's common interest community statute. The general mechanism, though: a declarant subsidy obligation means the declarant covers the gap between actual HOA operating expense and assessments collected while it owns most of the lots. If the prior declarant stopped paying, the association has a receivable it may assert against the declarant position, and whether that follows an assignment depends on the declaration's language and on state law. Read the assignment provision word by word and see whether there is a novation or whether you take it subject to existing defaults. The other half is what condition the association is actually in. Ask for two years of bank statements, the current budget, whether a reserve study exists, whether insurance is in force, and whether the pond you mentioned is an HOA maintenance obligation. If the association owns a stormwater facility that failed as-builts, you are looking at a future assessment on lots you own. And check whether the declarant period has a hard sunset date. Some declarations end declarant control on a calendar date regardless of conveyances. If that date is close, the rights you are buying may be worth much less than the seller thinks.

Parcel, the sunset date point is a good one to check early. Verity, one more thing worth a phone call: ask the city whether they will accept a new bond from a new owner and restart acceptance, or whether they consider the subdivision in default in a way that blocks further permits. Cities have refused to issue building permits in a phase with unaccepted improvements, and if that is the position here your builders cannot build and your $92,000 lots are worth dirt until the punch list clears.