Should we purchase home without permits?

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financial.freedom
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Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 12:52 am

We plan to purchase a home, however there is a discrepancy between the number of BR/BA currently compared with public records. We have asked the listing agent for the permit info without a response and are calling the city tomorrow. What are the ramifications for buying a home without permits for additions such as bedroom/bathroom? Will they fine us? Can they tear it down if it wasn't built properly? The home was built 50-60 years ago, so maybe the permits don't exist but we'll try to find out.

Thank you in advance!

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sdsailing
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Re: Should we purchase home without permits?

Post by sdsailing » Tue May 12, 2015 12:58 am

This is an important question but the answer is highly dependent on the city/town...and is a combination of the law/code and how that is selectively enforced (or not).

Also there is a difference if the discrepancy is between the listing number and the observed number or if there is a discrepancy between the listing number and the number on record with the city (a more serious problem, at least for the listing agent). Or a discrepancy between the SF in the listing vs. the city records.

The most common example seems to be a garage conversion to a non-permitted bedroom. A good RE agent should be able to answer these questions and give you confidence that the answer being provided is solid. What is your sense of this, have you asked your own agent?

financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 1:08 am

sdsailing wrote:This is an important question but the answer is highly dependent on the city/town...and is a combination of the law/code and how that is selectively enforced (or not).

Also there is a difference if the discrepancy is between the listing number and the observed number or if there is a discrepancy between the listing number and the number on record with the city (a more serious problem, at least for the listing agent). Or a discrepancy between the SF in the listing vs. the city records.

The most common example seems to be a garage conversion to a non-permitted bedroom. A good RE agent should be able to answer these questions and give you confidence that the answer being provided is solid. What is your sense of this, have you asked your own agent?
Thank you for the reply. There is no discrepancy between the listing number and the observed number, however there is a discrepancy between the listing number and the number on record with the city. Our agent wasn't sure how this affects things; she advised us to call the city in the morning. I'm surprised (and a little concerned) that the listing agent does not have this info available.

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greenspam
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Re: Should we purchase home without permits?

Post by greenspam » Tue May 12, 2015 2:00 am

Listing agent should look into it --- that's the reason ur paying him/her.... Doubtful the city would tear anything down but if work was done without permits and/or improperly so needs fixing... That is all on the seller so you
Modify the contract accordingly...
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rakaye47
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Re: Should we purchase home without permits?

Post by rakaye47 » Tue May 12, 2015 3:34 am

greenspam wrote:Listing agent should look into it --- that's the reason ur paying him/her.... Doubtful the city would tear anything down but if work was done without permits and/or improperly so needs fixing... That is all on the seller so you
Modify the contract accordingly...
[OT comments removed by admin LadyGeek]

ResearchMed
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Re: Should we purchase home without permits?

Post by ResearchMed » Tue May 12, 2015 5:16 am

financial.freedom wrote:We plan to purchase a home, however there is a discrepancy between the number of BR/BA currently compared with public records. We have asked the listing agent for the permit info without a response and are calling the city tomorrow. What are the ramifications for buying a home without permits for additions such as bedroom/bathroom? Will they fine us? Can they tear it down if it wasn't built properly? The home was built 50-60 years ago, so maybe the permits don't exist but we'll try to find out.

Thank you in advance!
Check with the local authorities, including the health department and tax assessor, and ask them if there are any other departments that you should contact.

It's possible that the existing house is somehow grandfathered in as is, so check for that, too.

YOU will want this documentation if you purchase, so that no future buyer challenges you!

It is possible that there is an error somewhere in the records. We just experienced this a few weeks ago.

We are now selling the last of our vacation rental properties, and much to our surprise (and almost horror), it turned out that the local records were way off in terms of square footage, and number of bedrooms and bathrooms.

We had completely re-done the architectural drawings from the builder's initial "cookie cutter" version.
And we well remember all of the back and forth among builder, architect, and us... and *then* the local authorities to get permissions of various sorts. But we got those permissions!

It took a few semi-sleepless nights, and it was all corrected on the official records.
Someone had erroneously entered the original information upon closing, rather than the updated permit information, AFTER "signing off" on the correct information.
One local agency had it correct, but one did not, and that - of course - was the problem.

We hadn't realized there were two different sets of official records.
At the time we closed, our agent showed us the set that matched, and we never investigated further.
Given that we DID get all of the approvals, we assumed it was all good to go, etc.
(I can't imagine - and don't want to - what the consequences might have been...)

We are now in possession of signed documents showing compliance, per all local agencies, to pass along to buyer.

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Re: Should we purchase home without permits?

Post by gd » Tue May 12, 2015 5:20 am

In my town your property tax assessment would change. They send people around occasionally to look for such things, there doesn't seem to be an automatic mechanism.

Permits for doing construction work aren't necessarily the same as being allowed to, say, have an in-law apartment. I doubt someone will come after you for the prior owner not getting a permit for a tradesman, although that's a good hint the work may not be to code-- again, they won't condemn your house, but it might be unsafe and you'll probably pay the price when you go to sell. Consider that building codes change constantly-- people don't need to retrofit every time, just when the next buyer is smarter than they were. You might have a more significant problem if the discrepancy is explicitly against zoning laws, such as in-law apartments or # of bathrooms vs. sewer or septic capacity. I'm not an expert in this, just a practiced mistake-maker.

My opinion is that successful realtors will brush off such questions not out of incompetence, but shrewdness-- they want to disavow any knowledge or role in potential problems. Should they advise and guide you? Yes. Will they? No. Appearing dismissive also plays down the problem, reducing chances of derailing the sale. They are salespeople, not advisors or friends.

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Re: Should we purchase home without permits?

Post by jfn111 » Tue May 12, 2015 6:35 am

rakaye47 wrote:
greenspam wrote:Listing agent should look into it --- that's the reason ur paying him/her.... Doubtful the city would tear anything down but if work was done without permits and/or improperly so needs fixing... That is all on the seller so you
Modify the contract accordingly...
[OT comments removed by admin LadyGeek]
[Response to OT comments removed by admin LadyGeek]

I'm an RE agent and I retired from a successful career and now sell houses because I enjoy working with people.

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jfn111
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Re: Should we purchase home without permits?

Post by jfn111 » Tue May 12, 2015 6:41 am

financial.freedom wrote:We plan to purchase a home, however there is a discrepancy between the number of BR/BA currently compared with public records. We have asked the listing agent for the permit info without a response and are calling the city tomorrow. What are the ramifications for buying a home without permits for additions such as bedroom/bathroom? Will they fine us? Can they tear it down if it wasn't built properly? The home was built 50-60 years ago, so maybe the permits don't exist but we'll try to find out.

Thank you in advance!
Get a good home inspector and have the house inspected for any possible code violations. A lot of people skip permits, that do the work themselves, and you just want to make sure the remodeling was done to code.
Do you have a buyers rep or are you working directly with the listing agent?

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Re: Should we purchase home without permits?

Post by carolinaman » Tue May 12, 2015 6:48 am

I added a closet to our recreation/office room. A RE agent advised me to do that saying it could be counted as a 4th BR which would increase the value of the house. The cost of adding the closet was minimal and did not require a building permit. I did not add another bath, and if I had, would have had to get a building permit.

I would advise getting clarification on what permitting was done or not done and get guidance from the building permitting department as to how this should be handled.

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Re: Should we purchase home without permits?

Post by johnubc » Tue May 12, 2015 7:09 am

It all depends.

Is the extra bedroom an extension, or the same foot print house with just a modification to it?

If the size of the house matches the size the city/county reports - you should be good - i.e., a den can often be used as a bedroom. If there a structural change has been made - then, no, you should not buy the house until the city/county records match what is existing.

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Re: Should we purchase home without permits?

Post by LadyGeek » Tue May 12, 2015 7:14 am

I removed some off-topic comments. As a reminder, see: Forum Policy
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.
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Re: Should we purchase home without permits?

Post by adamthesmythe » Tue May 12, 2015 7:39 am

> there is a discrepancy between the number of BR/BA currently compared with public records.

Does it LOOK like there was an addition?

I don't think public records have a very good reputation for accuracy. And if correcting the number of bedrooms has the potential for increasing the taxes...most would not try to make a correction.

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Re: Should we purchase home without permits?

Post by WhyNotUs » Tue May 12, 2015 7:43 am

By public records do you mean the assessors records or the building department records? They are two very different things, the latter is much more important than the other.

FYI, the do it yourself bedroom adder might not want to take building code advice from realtor.
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Re: Should we purchase home without permits?

Post by JDCarpenter » Tue May 12, 2015 7:43 am

Given that you mention a "city," I assume that the house is on sewer system, not a septic? (If the latter, this poses a bigger problem, as the increased number of bedrooms would likely be expensive to deal with.)

OTOH, in our small suburban city, septic systems are common...
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financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 11:01 am

I called the City, and they said the extra BR/BA won't be torn down unless there is something obviously wrong. It appears the additions were done many years past (not sure exactly when but not in the past 10 years or so). They said we may pay double the fines to get the permits, we cannot make changes to the home without permits, and it may be an issue for us when we sell the home. Our agent is not giving us advice one way or the other. The loan will go through without the permits, but our lender said it is still a good idea for us to get the permits. The listing agent is pushing us to remove all contingencies, but I want to have the City do their pre-sale inspection first before we remove all contingencies so we know what we're up against. We're thinking of removing all contingencies (general inspection, loan, appraisal) EXCEPT for the City inspection. What do you think?

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Re: Should we purchase home without permits?

Post by barnaclebob » Tue May 12, 2015 11:08 am

Why would you remove these contingencies? Is this a house you really want and are afraid of losing it? It would have to be a pretty new house in good condition for me to remove a general inspection contingency. If you know you are going to get a loan and can make up for appraisal deficiencies with your own cash then by all means remove the loan and appraisal contingencies.

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Re: Should we purchase home without permits?

Post by ResearchMed » Tue May 12, 2015 11:13 am

financial.freedom wrote:I called the City, and they said the extra BR/BA won't be torn down unless there is something obviously wrong. It appears the additions were done many years past (not sure exactly when but not in the past 10 years or so). They said we may pay double the fines to get the permits, we cannot make changes to the home without permits, and it may be an issue for us when we sell the home. Our agent is not giving us advice one way or the other. The loan will go through without the permits, but our lender said it is still a good idea for us to get the permits. The listing agent is pushing us to remove all contingencies, but I want to have the City do their pre-sale inspection first before we remove all contingencies so we know what we're up against. We're thinking of removing all contingencies (general inspection, loan, appraisal) EXCEPT for the City inspection. What do you think?
On our current home, we did not have a financing contingency (pre-approvals updated every few months while we were looking, and way beyond qualified for price point), but we would NEVER waive the inspection, and especially not for an older home... and one that had work done without permits.
That sounds quite risky, unless you are a contractor (and electrician, plumber, and what-not).

You might want to get the permits (and have the sale contingent upon getting them, at up to $X), because this situation will come up again when you go to sell, and it probably won't be any better then.
It would be good (for you) to have everything documented then.
If you can *not* get the permits, then that doesn't bode well for you when it would be time for you to sell.

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Re: Should we purchase home without permits?

Post by spectec » Tue May 12, 2015 11:23 am

You are in a difficult situation because you can't know what the long-term consequences might be. What might be acceptable now could be a big problem later on. You have to live with this possibility any time you accept something that isn't in code compliance, even in the local zoning people say not to worry (right now). Those are fickle people down at the building inspector & zoning office, and what's OK today can be a big problem next week, usually with just the stroke of a pen.

We once had a situation in which a house we were planning to buy had an encroachment problem - an addition (which had never been permitted) was too close to the property line (6 ft vs 8 ft, I think) . Our title attorney had found it, so I was sure the next title attorney would find it whenever we were ready to sell. The seller agreed to request & pay for a zoning variance, but it began to drag out and we had to postpone the closing twice. I realize now we made a mistake in giving them latitude - we should have canceled on the spot and demanded our deposit back with the understanding we MIGHT submit a new offer when the problem was resolved.

After multiple delays, we finally decided to notify the seller of our intent to cancel the contract for failure to close in a timely manner and inability to convey good title. Their lawyer then called us and said they were ready to close ASAP. When I pointed out that the variance issue had not been resolved, he tried to bluff me by saying we had agreed to purchase, we then agreed to allow them to correct the problem, the variance delay was not their fault, and the encroachment would not prevent us from completing the legalities. He even argued that an encroachment of this type doesn't cloud the title (technically it can be argued that it doesn't). We finally negotiated our way out of the contract because we wanted to move forward with buying a home. It cost us about a thousand dollars as I recall, but I think it was worth the cost to get out of the contract.

The real estate agent wasn't of much help in the entire process. He basically relayed messages and apologies - never did have a good idea on any meaningful way to resolve anything. He probably knew the deal was in trouble and was just crossing his fingers that they could wear us down and we would sign & move on. I stayed mad at the attorney for a couple of years. But after thinking about how well he had looked out for his client's interests, I decided if he was ever involved in any legal matter with me again, I'd want him on my side.
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Re: Should we purchase home without permits?

Post by Pajamas » Tue May 12, 2015 11:54 am

Just tell your agent the seller needs to correct this before you will close. You don't want to inherit the problem and any possible consequences. You are basically buying a pig in a poke without resolving the permit and having a city inspection.

Of course the selling agent is wanting you to waive everything. . . :oops: That's a danger signal.

How the city handles it will depend on the general attitude about this as well as the specific situation. In the NYC area they are cracking down on unpermitted (and often dangerous) accessory apartments, but your local government may not see this as part of a larger problem.

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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 2:47 pm

Thank you for the replies.

Our lender said this will not affect the loan and the appraisal matches our offer.

So our plan is to remove all contingencies EXCEPT the City inspection.

I think then if the inspection shows problems with the permits, we can still back out or seller can solve the issues.

What do you think with this plan? Is there a certain way we should phrase the contingency so we can still back out?

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Re: Should we purchase home without permits?

Post by Dolphin1 » Tue May 12, 2015 2:53 pm

We purchased a home that has 2 buildings on the property without permits, and now I regret it. The reason is, I live in fear of needing permitted work on the home itself, and having the permit inspector notice the other buildings and red tag them for not having permits.

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Re: Should we purchase home without permits?

Post by rogermexico » Tue May 12, 2015 3:17 pm

It's not uncommon in my urban area for licensed trades-persons to not bother with permits. Also I wouldn't rely on public records but would rather rely on my own inspector. Our city inspectors are pretty lax and just take a quick look, so it's not like they're going to notice other discrepancies between your house and what's in the record. When the rather significant property tax increases that can accompany improvements are considered, you're probably better off leaving the city out of it.

financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 3:28 pm

It's true that property taxes would go up, but I think we have to consider that against the cost of City fines, inability to make improvements, and potential loss of negotiating power when we sell the house in the future.

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Re: Should we purchase home without permits?

Post by Grt2bOutdoors » Tue May 12, 2015 3:40 pm

financial.freedom wrote:It's true that property taxes would go up, but I think we have to consider that against the cost of City fines, inability to make improvements, and potential loss of negotiating power when we sell the house in the future.
You're out of your mind, IMHO to make such a major financial commitment without having all of the I's dotted and T's crossed. The realtor is in it for the commission, the seller is in it for the $$$ and you? You are about to plunk down a lot of cash and sign your name to a promissory note for the balance and take on the hassle of fixing potential code violations, etc. No way, find another house.......or let the seller fix the problems, make it a condition of the closing that all code violations are removed and property assessment is in conformance with public town records and signed off by town assessor. Otherwise, find yourself a new home, there are plenty out there and there's plenty of land no matter what the realtor says.
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Re: Should we purchase home without permits?

Post by Grt2bOutdoors » Tue May 12, 2015 3:43 pm

rogermexico wrote:It's not uncommon in my urban area for licensed trades-persons to not bother with permits. Also I wouldn't rely on public records but would rather rely on my own inspector. Our city inspectors are pretty lax and just take a quick look, so it's not like they're going to notice other discrepancies between your house and what's in the record. When the rather significant property tax increases that can accompany improvements are considered, you're probably better off leaving the city out of it.
Not uncommon? The lack of a permit also means no proper inspection was done. That's a code violation. Umm...sorry, I don't do business with lax licensed tradesman, they should have their licenses revoked.
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Re: Should we purchase home without permits?

Post by Grt2bOutdoors » Tue May 12, 2015 3:47 pm

financial.freedom wrote:I called the City, and they said the extra BR/BA won't be torn down unless there is something obviously wrong. It appears the additions were done many years past (not sure exactly when but not in the past 10 years or so). They said we may pay double the fines to get the permits, we cannot make changes to the home without permits, and it may be an issue for us when we sell the home. Our agent is not giving us advice one way or the other. The loan will go through without the permits, but our lender said it is still a good idea for us to get the permits. The listing agent is pushing us to remove all contingencies, but I want to have the City do their pre-sale inspection first before we remove all contingencies so we know what we're up against. We're thinking of removing all contingencies (general inspection, loan, appraisal) EXCEPT for the City inspection. What do you think?
Big mistake to remove "all contingencies". What is the listing agent's motivation? - Why? The seller's commission of course. Remember, the listing agent is in it for the money, your money to be precise. Instead of a gun, they are using a telephone and some gentle persuasion to convince you to give it to them......you should tell them to go pound sand. Instead of asking us, what does your attorney say about all this?
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financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 3:55 pm

Grt2bOutdoors wrote:
financial.freedom wrote:I called the City, and they said the extra BR/BA won't be torn down unless there is something obviously wrong. It appears the additions were done many years past (not sure exactly when but not in the past 10 years or so). They said we may pay double the fines to get the permits, we cannot make changes to the home without permits, and it may be an issue for us when we sell the home. Our agent is not giving us advice one way or the other. The loan will go through without the permits, but our lender said it is still a good idea for us to get the permits. The listing agent is pushing us to remove all contingencies, but I want to have the City do their pre-sale inspection first before we remove all contingencies so we know what we're up against. We're thinking of removing all contingencies (general inspection, loan, appraisal) EXCEPT for the City inspection. What do you think?
Big mistake to remove "all contingencies". What is the listing agent's motivation? - Why? The seller's commission of course. Remember, the listing agent is in it for the money, your money to be precise. Instead of a gun, they are using a telephone and some gentle persuasion to convince you to give it to them......you should tell them to go pound sand. Instead of asking us, what does your attorney say about all this?
We don't have an attorney. I think that is more common for RE transactions on the E Coast but will double-check.

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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 3:57 pm

Grt2bOutdoors wrote:
financial.freedom wrote:It's true that property taxes would go up, but I think we have to consider that against the cost of City fines, inability to make improvements, and potential loss of negotiating power when we sell the house in the future.
You're out of your mind, IMHO to make such a major financial commitment without having all of the I's dotted and T's crossed. The realtor is in it for the commission, the seller is in it for the $$$ and you? You are about to plunk down a lot of cash and sign your name to a promissory note for the balance and take on the hassle of fixing potential code violations, etc. No way, find another house.......or let the seller fix the problems, make it a condition of the closing that all code violations are removed and property assessment is in conformance with public town records and signed off by town assessor. Otherwise, find yourself a new home, there are plenty out there and there's plenty of land no matter what the realtor says.
Thank you, we will put it a continency for City inspection, code violations etc. -- we have to figure out the best way to phrase it so that we can back out if needed. Unfortunately, not much land where we work and live in coastal SoCal.

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Re: Should we purchase home without permits?

Post by Grt2bOutdoors » Tue May 12, 2015 4:11 pm

financial.freedom wrote:
Grt2bOutdoors wrote:
financial.freedom wrote:It's true that property taxes would go up, but I think we have to consider that against the cost of City fines, inability to make improvements, and potential loss of negotiating power when we sell the house in the future.
You're out of your mind, IMHO to make such a major financial commitment without having all of the I's dotted and T's crossed. The realtor is in it for the commission, the seller is in it for the $$$ and you? You are about to plunk down a lot of cash and sign your name to a promissory note for the balance and take on the hassle of fixing potential code violations, etc. No way, find another house.......or let the seller fix the problems, make it a condition of the closing that all code violations are removed and property assessment is in conformance with public town records and signed off by town assessor. Otherwise, find yourself a new home, there are plenty out there and there's plenty of land no matter what the realtor says.
Thank you, we will put it a continency for City inspection, code violations etc. -- we have to figure out the best way to phrase it so that we can back out if needed. Unfortunately, not much land where we work and live in coastal SoCal.
You need an attorney, I am not an attorney and I can tell you to get out of something contractually you need specific language that is clear. The attorney can do that for you, if an attorney costs $1K-$2K but the house costs $600K and there is a future problem with it, what is the more cost-efficient choice? It's not a trick question. Get an attorney and don't tell the listing agent you are obtaining the services of one or then again, maybe you should as if to telegraph that you are not playing ball without proper legal representation?
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Re: Should we purchase home without permits?

Post by WhyNotUs » Tue May 12, 2015 4:38 pm

If you leave all of the normal inspections in then you will have plenty of pathways out if you find more irregularities.
Some people buy homes without due diligence and it turns out fine, many others learn hard lessons.
Dealing with the inspection of the unauthorized addition will take plenty of time to allow you to perform due diligence in the other areas. It does not sound to me like you have someone on your purchase team looking out for your long term best interests and you willingness to waive other rights when it will not have any time benefit suggests that you are a little anxious. Caveat Emptor.
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financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 4:41 pm

We want to show the buyer that we are pursuing the purchase and removing some of the contingencies demonstrates that. There is mild urgency since they have another buyer. At the same time, we want a way out if the building permit situation does not work out (additions are not up to code, etc.).

financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 4:42 pm

Will contact RE attorney.

ourbrooks
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Re: Should we purchase home without permits?

Post by ourbrooks » Tue May 12, 2015 4:54 pm

Leave in all of the inspections. Add additional ones if you can think of any which might be worthwhile. You're in a perfect positions to get a price reduction, depending on the laws in your local area.

Where I live, sellers are required to disclose any known defects in a property. Sellers can be very forgetful at times, but once you have an inspection done and give the results of the inspection to the buyer, they're required to disclose them to future purchasers. If you already have a contract with the seller and you decide not to buy, the seller will still have to disclose your inspection results to other buyers. If the inspection results are negative, other potential buyers might lose their enthusiasm.

Check with your agent whether the same laws/practices are in effect in your area.

financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 5:26 pm

I called a RE lawyer and he said the seller needs to furnish the permits. He advised us not to remove contingencies until this is resolved, and that we do not need a lawyer yet.

afan
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Re: Should we purchase home without permits?

Post by afan » Tue May 12, 2015 5:35 pm

If you can figure out what was done without permits, an inspector may be able to help you with the next step. That would be guessing the risk you would assume by buying the house. People skip permits because they cost money and because they involve inspection of the work. Someone who plans to do shoddy work, or knows from experience that they don't know what they are doing, may decide they are better off avoiding an inspection.

For bigger work, there may be a series of inspections of framing, plumbing, electrical work, etc. Much of this must happen before the walls are closed up. So your inspector may or may not be able to see what was done. You want an idea of what MIGHT have been done wrong. If the work is all visible, an inspector may be able to see and evaluate. If everything is behind finished walls, it could be a gamble what went on.
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nordsteve
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Re: Should we purchase home without permits?

Post by nordsteve » Tue May 12, 2015 5:41 pm

Nearly every house that old is going to have some unpermitted work on it.

The key here is more two things.

1. Is the unpermitted work at the quality level you want--e.g., electrical?
2. Is unpermitted work that influences the value of your property legal?

An example of a problem under #2, in my city, is a basement bedroom that does not have a legal egress window.

The house I currently live in had several undisclosed problems and unpermitted changes. I was aware of them prior to closing and chose to go through because of the unique nature of the lot and the price I'd negotiated.

financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 5:43 pm

afan wrote:If you can figure out what was done without permits, an inspector may be able to help you with the next step. That would be guessing the risk you would assume by buying the house. People skip permits because they cost money and because they involve inspection of the work. Someone who plans to do shoddy work, or knows from experience that they don't know what they are doing, may decide they are better off avoiding an inspection.

For bigger work, there may be a series of inspections of framing, plumbing, electrical work, etc. Much of this must happen before the walls are closed up. So your inspector may or may not be able to see what was done. You want an idea of what MIGHT have been done wrong. If the work is all visible, an inspector may be able to see and evaluate. If everything is behind finished walls, it could be a gamble what went on.
An inspector did a thorough job as far as I can tell (obviously I'm a novice when it comes to construction). However, as you mentioned no one knows what is behind the walls. It appears this was done not by the seller but a previous owner (who lived there a long time, so could have been 15-25 years ago).

financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Tue May 12, 2015 5:45 pm

stevep001 wrote:Nearly every house that old is going to have some unpermitted work on it.

The key here is more two things.

1. Is the unpermitted work at the quality level you want--e.g., electrical?
2. Is unpermitted work that influences the value of your property legal?

An example of a problem under #2, in my city, is a basement bedroom that does not have a legal egress window.

The house I currently live in had several undisclosed problems and unpermitted changes. I was aware of them prior to closing and chose to go through because of the unique nature of the lot and the price I'd negotiated.
For #1 as far as we can tell, the answer is yes.

For #2 we don't know, but hopefully this will be addressed by the City inspection.

curmudgeon
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Re: Should we purchase home without permits?

Post by curmudgeon » Tue May 12, 2015 8:59 pm

The biggest thing in my mind here is that you need to think of this purchase as needing some extra "contingency funds" in your budget. Older houses need repairs and updating whether there were permits in the past or not. I've had to deal with plenty of major issues on older houses where the work involved had been fully permitted. In some ways, I'd rather deal with well-seasoned older unpermitted work than with a "flip" which might have permits but the work was done in a huge hurry for someone not planning to live there.

I know of areas in the US where as recently as 40 years ago, there were no building permits or inspections for private residences. The houses didn't all fall down as a result. But as a buyer, it was wise to have a little more margin to deal with potential problems; you didn't want to be leveraged to your eyeballs.

Definitely proceed with extra caution. In SoCal, I'd expect the typical seller response to be "take it or leave it", so you want to develop a good understanding of the local environment regarding these things (which can vary widely from city to city). You may find that it is worth paying extra for a house that gives you more peace of mind in these things, but I suspect that 90% of the SoCal houses more than 30 years old have some amound of unpermitted work, even if it is just a window or water heater replacement.

LeeMKE
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Re: Should we purchase home without permits?

Post by LeeMKE » Tue May 12, 2015 11:02 pm

Glad to hear you got the advice to keep your contingencies in place and tell the seller to produce permits.

There is really no way to inspect a bathroom nor kitchen without removing things and opening the walls. if it wasn't inspected during construction, the authorities have the option to require demolition to inspect inside the wall. I've seen this required. Sometimes the general condition of the work led to some suspicion the work was not to code, but in one case, the building inspector was just ornery IMHO. Oh, and when they inspect the current code is used, not the code 10 - 15 years ago when the addition may have been made. I doubt anyplace in Southern California will issue a grandfathered permit.

The seller has a problem. Don't adopt it from them.
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Grt2bOutdoors
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Re: Should we purchase home without permits?

Post by Grt2bOutdoors » Wed May 13, 2015 8:24 am

LeeMKE wrote:Glad to hear you got the advice to keep your contingencies in place and tell the seller to produce permits.

There is really no way to inspect a bathroom nor kitchen without removing things and opening the walls. if it wasn't inspected during construction, the authorities have the option to require demolition to inspect inside the wall. I've seen this required. Sometimes the general condition of the work led to some suspicion the work was not to code, but in one case, the building inspector was just ornery IMHO. Oh, and when they inspect the current code is used, not the code 10 - 15 years ago when the addition may have been made. I doubt anyplace in Southern California will issue a grandfathered permit.

The seller has a problem. Don't adopt it from them.
^^^Exactly.
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NateH
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Re: Should we purchase home without permits?

Post by NateH » Wed May 13, 2015 8:48 am

ourbrooks wrote:Leave in all of the inspections. Add additional ones if you can think of any which might be worthwhile. You're in a perfect positions to get a price reduction, depending on the laws in your local area.

Where I live, sellers are required to disclose any known defects in a property. Sellers can be very forgetful at times, but once you have an inspection done and give the results of the inspection to the buyer, they're required to disclose them to future purchasers. If you already have a contract with the seller and you decide not to buy, the seller will still have to disclose your inspection results to other buyers. If the inspection results are negative, other potential buyers might lose their enthusiasm.

Check with your agent whether the same laws/practices are in effect in your area.
I assume less-than-honest agents will go around the requirement for disclosure and become even more 'forgetful'.
After all, how is the next potential buyer to know they are being duped? It is just one more signature slipped into the pile of papers at closing.
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ddurrett896
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Re: Should we purchase home without permits?

Post by ddurrett896 » Wed May 13, 2015 9:12 am

financial.freedom wrote:I called the City, and they said the extra BR/BA won't be torn down unless there is something obviously wrong.


The problem I see is that when you pull a permit, say for construction, they want to see the work before sheetrock and insulation to inspect the framing. This means ripping the wall out down to the studs for inspection. Once the framing is OKed the wall can be finished for a final inspection.

Would I buy a house without a permit? Yes
Would I pay the premium for work done without a permit? No

I'd get a good house inspector to look it over and have a structural engineer look it over (and the whole house). If everything is good, I'd buy it but only based on what the city says the house had BR/BA wise.

financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Wed May 13, 2015 5:33 pm

ddurrett896 wrote:
financial.freedom wrote:I called the City, and they said the extra BR/BA won't be torn down unless there is something obviously wrong.


The problem I see is that when you pull a permit, say for construction, they want to see the work before sheetrock and insulation to inspect the framing. This means ripping the wall out down to the studs for inspection. Once the framing is OKed the wall can be finished for a final inspection.

Would I buy a house without a permit? Yes
Would I pay the premium for work done without a permit? No

I'd get a good house inspector to look it over and have a structural engineer look it over (and the whole house). If everything is good, I'd buy it but only based on what the city says the house had BR/BA wise.
The City will do their inspection this week, so hopefully we'll know soon. Not sure if there is time to schedule a stuctural engineer but can look into it depending on what happens with the City.

If they say everything looks up to code and nothing needs to be torn down but permits are needed and fines need to be paid, how should we approach it with the listing agent?

Should we:

A. Tell them we won't remove contingencies until they get permits and pay the fines?

OR

B. Tell them we want credit at closing for the cost of getting permits and paying fines?

ResearchMed
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Re: Should we purchase home without permits?

Post by ResearchMed » Wed May 13, 2015 5:36 pm

financial.freedom wrote:
ddurrett896 wrote:
financial.freedom wrote:I called the City, and they said the extra BR/BA won't be torn down unless there is something obviously wrong.


The problem I see is that when you pull a permit, say for construction, they want to see the work before sheetrock and insulation to inspect the framing. This means ripping the wall out down to the studs for inspection. Once the framing is OKed the wall can be finished for a final inspection.

Would I buy a house without a permit? Yes
Would I pay the premium for work done without a permit? No

I'd get a good house inspector to look it over and have a structural engineer look it over (and the whole house). If everything is good, I'd buy it but only based on what the city says the house had BR/BA wise.
The City will do their inspection this week, so hopefully we'll know soon. Not sure if there is time to schedule a stuctural engineer but can look into it depending on what happens with the City.

If they say everything looks up to code and nothing needs to be torn down but permits are needed and fines need to be paid, how should we approach it with the listing agent?

Should we:

A. Tell them we won't remove contingencies until they get permits and pay the fines?

OR

B. Tell them we want credit at closing for the cost of getting permits and paying fines?
You want THEM to pay these costs.

Otherwise (at a minimum), what would happen if you didn't close for whatever reason?
You'd still be on the hook for these costs for permits for *their* house.

RM
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goodenoughinvestor
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Re: Should we purchase home without permits?

Post by goodenoughinvestor » Wed May 13, 2015 5:52 pm

If the city can give you a defnitive, exact amount for permits and fines then you should request a credit back at closing. This is better for two reasons: you can close faster (that's good for seller, too) and you can be in charge of the process and make sure it's done absolutely right. The seller has incentive to cut corners--you don't. However, if there is uncertainty about how much this is all going to cost then either insist they deal with it all before closing or put an inflated amount in escrow.

financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Wed May 13, 2015 7:16 pm

ResearchMed wrote:
financial.freedom wrote:
ddurrett896 wrote:
financial.freedom wrote:I called the City, and they said the extra BR/BA won't be torn down unless there is something obviously wrong.


The problem I see is that when you pull a permit, say for construction, they want to see the work before sheetrock and insulation to inspect the framing. This means ripping the wall out down to the studs for inspection. Once the framing is OKed the wall can be finished for a final inspection.

Would I buy a house without a permit? Yes
Would I pay the premium for work done without a permit? No

I'd get a good house inspector to look it over and have a structural engineer look it over (and the whole house). If everything is good, I'd buy it but only based on what the city says the house had BR/BA wise.
The City will do their inspection this week, so hopefully we'll know soon. Not sure if there is time to schedule a stuctural engineer but can look into it depending on what happens with the City.

If they say everything looks up to code and nothing needs to be torn down but permits are needed and fines need to be paid, how should we approach it with the listing agent?

Should we:

A. Tell them we won't remove contingencies until they get permits and pay the fines?

OR

B. Tell them we want credit at closing for the cost of getting permits and paying fines?
You want THEM to pay these costs.

Otherwise (at a minimum), what would happen if you didn't close for whatever reason?
You'd still be on the hook for these costs for permits for *their* house.

RM
I don't think the City would allow us to pay fines and get permits before closing since we are not the owners, but I could be wrong. Agree, either option above would mean they'd pay the costs.

It's a tough market for buyers in our area; possible they could say "take it or leave it" as mentioned above.

financial.freedom
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Re: Should we purchase home without permits?

Post by financial.freedom » Wed May 13, 2015 7:17 pm

goodenoughinvestor wrote:If the city can give you a defnitive, exact amount for permits and fines then you should request a credit back at closing. This is better for two reasons: you can close faster (that's good for seller, too) and you can be in charge of the process and make sure it's done absolutely right. The seller has incentive to cut corners--you don't. However, if there is uncertainty about how much this is all going to cost then either insist they deal with it all before closing or put an inflated amount in escrow.
Good advice, I think this is probably the better option. Hopefully the City can give us definitive answers.

novicemoney
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Re: Should we purchase home without permits?

Post by novicemoney » Wed May 13, 2015 11:35 pm

There is another consideration that I don't think has been brought up and that is homeowner's insurance. If it is evident that you have "illegal" structures on this property, I think you will not be able to obtain a policy until all discrepancies are corrected. You may want to check with your insurance agent.

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