Buying house w unpermitted improvement. Should we walk?

[LAX_Esq]

Just got under contract to buy a house (1st time buyers). When looking at the house, we noticed a garage that had been converted into a bonus room. From pics of the previous sale, the original owner did this, not the current owner (owner #2). In the area, almost every house has improvements and I'm naive to real estate, and I didn't think much of the issue of whether an unpermitted improvement is a big deal. I asked our agent about the bonus room, and he just kind of blew it off and said I can look up the city/county records to see if they have a permit.

I did look around and I'm pretty sure it was unpermitted but I'm not really sure I've covered all bases. We got the seller's disclosures, which disclosed 3 problems with the bonus room (leaky skylights installed, roof had to be installed over skylights, termites were in walls but allegedly fixed). However, seller checked no that to the question: do you have knowledge of any unpermitted work whether you did it yourselves or not. Their response seems weird given they disclosed these 3 problems with the bonus room, and I'd think they have to know the previous owners did unpermitted work.

At this point, what should I do? We do like the house a lot and the market is tough. Should we tell them to get it retroactively permitted or I walk? i have no idea what the work would cost them and if it would be so much that they would just let us walk and hope to re-sell it to someone else who doesn't care. Also, do I even want them doing the work themselves bc it will be shoddy since they don't care? At this point, I don't even want to waste $750 on my inspection until I know what's going on with this.

Thanks for any advice!

[AsherO]

If you speak to a local mortgage broker (I know you said you don’t trust them) they would tell you if it could cause you problems qualifying for a mortgage in your area.

(Disclaimer: no real estate experience here)

[yos9694]

What is your concern? Are you worried about the legality of the improvements and the city monning you for them later? Or are you worried about the integrity of the work? If it's the former I imagine that would be resolved when the seller gets a C/O from the city. If it's the latter then I think getting a thorough inspection is a good idea and not a waste of money. Find out exactly what problems to expect and then you can deal with the question of are you prepared to take on those issues for the sake of getting the house.

Ultimately, it is a difficult market to buy in for us folks who need a very specific location. Hatzlacha

[LAX_Esq]

What is your concern? Are you worried about the legality of the improvements and the city monning you for them later? Or are you worried about the integrity of the work? If it's the former I imagine that would be resolved when the seller gets a C/O from the city. If it's the latter then I think getting a thorough inspection is a good idea and not a waste of money. Find out exactly what problems to expect and then you can deal with the question of are you prepared to take on those issues for the sake of getting the house.

There are about 10 different things I'm worried about -- safety for us, trouble getting the sale to close because the bank cares, insurance not covering problems because of unpermitted work, liability if we ever rent it out and tenants get hurt due to unpermitted work, harming our ability to resell the house because a buyer will care about unpermitted work (just as we do), city giving us trouble, having to clean up the mess of shoddy work if we want to get permits and convert this bonus room into a bedroom (it doesn't have a window or closet), etc.

At first I thought permits shmermits, but then I looked into it more and it seems to be a huge deal to have a house with unpermitted work.

Ultimately, it is a difficult market to buy in for us folks who need a very specific location. Hatzlacha

Yep, this housing market is tough enough, and it's even tougher if you're locked into a few blocks!

[daybyday]

Just got under contract to buy a house (1st time buyers). When looking at the house, we noticed a garage that had been converted into a bonus room. From pics of the previous sale, the original owner did this, not the current owner (owner #2). In the area, almost every house has improvements and I'm naive to real estate, and I didn't think much of the issue of whether an unpermitted improvement is a big deal. I asked our agent about the bonus room, and he just kind of blew it off and said I can look up the city/county records to see if they have a permit.

I did look around and I'm pretty sure it was unpermitted but I'm not really sure I've covered all bases. We got the seller's disclosures, which disclosed 3 problems with the bonus room (leaky skylights installed, roof had to be installed over skylights, termites were in walls but allegedly fixed). However, seller checked no that to the question: do you have knowledge of any unpermitted work whether you did it yourselves or not. Their response seems weird given they disclosed these 3 problems with the bonus room, and I'd think they have to know the previous owners did unpermitted work.

At this point, what should I do? We do like the house a lot and the market is tough. Should we tell them to get it retroactively permitted or I walk? i have no idea what the work would cost them and if it would be so much that they would just let us walk and hope to re-sell it to someone else who doesn't care. Also, do I even want them doing the work themselves bc it will be shoddy since they don't care? At this point, I don't even want to waste $750 on my inspection until I know what's going on with this.

Thanks for any advice!

It's very possible that the seller him self is unaware of the work being done illegally if it is so. If there aren't any violations on the record for the work than most likely it is not a big deal. Ultimately u need to evaluate whether or not u are willing to take the risk and go along with it or walk away. If you are happy with the price and everything else i think stick with it.

If you can determine that the work was done illegally and was not disclosed it should be enough for you to be able to pull out of the contract without a penalty. Is there a real estate lawyer involved? If so, i would recommend you seek his advice.

[LAX_Esq]

It's very possible that the seller him self is unaware of the work being done illegally if it is so. If there aren't any violations on the record for the work than most likely it is not a big deal. Ultimately u need to evaluate whether or not u are willing to take the risk and go along with it or walk away. If you are happy with the price and everything else i think stick with it.

If you can determine that the work was done illegally and was not disclosed it should be enough for you to be able to pull out of the contract without a penalty. Is there a real estate lawyer involved? If so, i would recommend you seek his advice.

We're within our inspection period so we can walk without penalty easily for whatever reason. In the end, it doesn't really matter what they disclosed or didn't know or did know etc. -- because we can just walk. What matters, I suppose, is if it's a risk/liability for us to take this house.

After a day of research on this, it seems like we may never know if it was permitted or not. We feel like we should either the seller to retroactively permit it to clear up any potential issues, or threaten to walk...

[whacked1]

Every neighborhood/township is different.

Are you required to get a CO prior to closing? Are you in NYC ?

IE, if you were in nyc you can easily get building plans from dob. There is no co required for a sale so that wouldnt help you. However, even if you would get a violation in the future you can get an  waiver on penalties since it was from a prior ownership.

If you need a CO, as long as they get a CO prior to closing, I wouldnt be concerned about not being able to sell. As theres no reason why you wouldnt be able to get one as well when you want to sell .

[biobook]

We're within our inspection period so we can walk without penalty easily for whatever reason. In the end, it doesn't really matter what they disclosed or didn't know or did know etc. -- because we can just walk. What matters, I suppose, is if it's a risk/liability for us to take this house.

After a day of research on this, it seems like we may never know if it was permitted or not. We feel like we should either the seller to retroactively permit it to clear up any potential issues, or threaten to walk...

But you don't want to walk.  You want the house.

I know someone who was buying a condo, and discovered that the air-conditioning had been put in without a permit, and he got the seller to lower the price by the amount expected to cover the permits, inspection, and any necessary construction to bring it up to code.  (I don't know if there was a set amount, or if they just agreed that the seller would cover whatever it cost.)  If you do something like that, you're in charge, so don't have to worry about them doing a poor job.  I agree with the suggestion to contact a real estate lawyer, who might also have ideas on researching the permit.

[AsherO]

Every neighborhood/township is different.

Are you required to get a CO prior to closing? Are you in NYC ?

IE, if you were in nyc you can easily get building plans from dob. There is no co required for a sale so that wouldnt help you. However, even if you would get a violation in the future you can get an  waiver on penalties since it was from a prior ownership.

If you need a CO, as long as they get a CO prior to closing, I wouldnt be concerned about not being able to sell. As theres no reason why you wouldnt be able to get one as well when you want to sell .

This is the kind of advice I was hoping you’d get. But you need to get it from someone familiar with your particular area/jurisdiction.

[S209]

Where is the home? City, State?

[LAX_Esq]

But you don't want to walk.  You want the house.

I know someone who was buying a condo, and discovered that the air-conditioning had been put in without a permit, and he got the seller to lower the price by the amount expected to cover the permits, inspection, and any necessary construction to bring it up to code.  (I don't know if there was a set amount, or if they just agreed that the seller would cover whatever it cost.)  If you do something like that, you're in charge, so don't have to worry about them doing a poor job.  I agree with the suggestion to contact a real estate lawyer, who might also have ideas on researching the permit.

The thing is that it's impossible for anyone to reasonably predict the cost of fixing the mess without incurring a sizeable initial expense to knock down a wall and hire an engineer to study the situation. It's not a situation where any contractor can just take a look and say, "yeah, it'll cost X to redo this illegal AC unit." It's a total wild card what it would cost to fix this bonus room. I'm just making up numbers, but maybe it's all fine and just needs someone to sign off on something to get a permit and it costs $5K or maybe it's a total mess and it costs $30K. No way the seller's going to give us a sizeable credit to cover the upper extreme when there's no evidence it will actually cost that much. In this market, any credit the seller agrees to give without knowing what the actual cost is will basically be de minimus to "shut us up" and then the risk is totally on us that it costs much more to fix.

Yeah, we want the house. But not if we have to buy it and it's a "black box" as to what it's going to cost to get this thing permitted and up to code.

We'll likely never know if there was ever a permit (or at least will "never") know within the 10 day inspection period); we suspect no permit. I'm a lawyer and I know how to research stuff and ask gov officials to pull old records. I did ask a local RE lawyer friend here, and he said I was doing everything I was supposed to be doing to track them down. He said the government isn't going to ever fine us if the records are destroyed/missing. But there are still a million other issues besides the government fining us.

Every neighborhood/township is different.

Are you required to get a CO prior to closing? Are you in NYC ?

We're in a smaller OOT community. What's a CO?

[AsherO]

We're in a smaller OOT community. What's a CO?

Certificate of Occupancy, you need one on NYC for it to be legally inhabited. People in NYC sometimes do things by the book, get the CofO, and then make adjustments.

[Lurker]

What others said about it depending on the jurisdiction is 100% on point. The safety issues can be addressed easier than the permits in some places.

Since you're within the inspection period, I'd reach out to the seller, ask if they know they have permitted work, and see how they respond. Ultimately, if they checked "no" on the undermined work, they're legally on the hook.

[daybyday]

The thing is that it's impossible for anyone to reasonably predict the cost of fixing the mess without incurring a sizeable initial expense to knock down a wall and hire an engineer to study the situation. It's not a situation where any contractor can just take a look and say, "yeah, it'll cost X to redo this illegal AC unit." It's a total wild card what it would cost to fix this bonus room. I'm just making up numbers, but maybe it's all fine and just needs someone to sign off on something to get a permit and it costs $5K or maybe it's a total mess and it costs $30K. No way the seller's going to give us a sizeable credit to cover the upper extreme when there's no evidence it will actually cost that much. In this market, any credit the seller agrees to give without knowing what the actual cost is will basically be de minimus to "shut us up" and then the risk is totally on us that it costs much more to fix.

Yeah, we want the house. But not if we have to buy it and it's a "black box" as to what it's going to cost to get this thing permitted and up to code.

We'll likely never know if there was ever a permit (or at least will "never") know within the 10 day inspection period); we suspect no permit. I'm a lawyer and I know how to research stuff and ask gov officials to pull old records. I did ask a local RE lawyer friend here, and he said I was doing everything I was supposed to be doing to track them down. He said the government isn't going to ever fine us if the records are destroyed/missing. But there are still a million other issues besides the government fining us.

We're in a smaller OOT community. What's a CO?

Sounds like you just need to decide are you willing to take the risk or not.. Just so you know most people kind of want to walk away as soon as they get in contract, because it's getting back into comfort zone where they can still be looking for 'something better'.

If the place and price are right i would recommend you stick with it. An illegal room on the side really doesn't sound like a make it or break it. You can ask for a price deduction but don't forget that spoiling the well can have negative results, so tread very cautiously..

I'm just throwing my two cents based on buying two homes in the last couple of years.

It is my personal opinion, it might be totally wrong

[whacked1]

Assuming this room is a one story add-on (in regards to safety not code), i wouldn't be that concerned. You can obviously pull as many records as you can to see if filed legally. (Without knowing what county/state you are moving to, its difficult to say for certain).

[Lurker]

Assuming this room is a one story add-on (in regards to safety not code), i wouldn't be that concerned. You can obviously pull as many records as you can to see if filed legally. (Without knowing what county/state you are moving to, its difficult to say for certain).

In FL, it can be a big concern.

[whacked1]

In FL, it can be a big concern.

Even if home traded a few times?

[Lurker]

Even if home traded a few times?

Depends on the city. When it was done and by whom doesn't matter.

[whacked1]

Depends on the city. When it was done and by whom doesn't matter.

I hear. Same with NYC. However, because of

We're in a smaller OOT community. What's a CO?

and the difficulty of OP tracking plans, lead me to

Assuming this room is a one story add-on (in regards to safety not code), i wouldn't be that concerned. You can obviously pull as many records as you can to see if filed legally. (Without knowing what county/state you are moving to, its difficult to say for certain).

Again, you need to check with local people and see just how tough the city is

[Lurker]

I hear. Same with NYC. However, because of and the difficulty of OP tracking plans, lead me to  Again, you need to check with local people and see just how tough the city is

Being in FL, I automatically assumed converted garage or patio. Those can cause issues, especially if you get other permitted work done in the future.