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Old 07-13-2008, 02:07 AM   #1
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Please advise: buying a house without permits?


The house in question is going up for auction, it's being sold as is, where is, and the previous owner put up an entire addition, 1 bedroom + 1 bathroom, without any building permits.

I have 2 questions:
-Can I get into trouble with city inspectors for something the previous owner built, without permits?

-Will it be possible for me to get homeowner's insurance to cover the new addition?

Thanks!

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Old 07-13-2008, 06:45 AM   #2
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Please advise: buying a house without permits?


I believe only those experienced in renovating house's should get involved in real estate auctions. You are taking a big chance. You can limit some risk if you can get the house inspected prior to the auction by the town's building inspectors and have it certified that the additions are up to code. It would also help if you can get a background check on the previous owner; How qualified is he? If you have the winning bid and take control of the house and the inspectors find serious structural problems, its now your problem. If the people who control the auction will not allow the authorities to inspect the property before the auction, then walk away from it.

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Old 07-13-2008, 10:57 AM   #3
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Please advise: buying a house without permits?


My advice: Walk away from it.
Why: The house is up for auction. What does that tell you? It tells you that the previous owner ran out of money. When people don't have money, they don't take the effort to do things properly.
That kind of situation (house on the auction block with work performed without permits, and possibly by him/herself) spells trouble, and possibly massive correctionary repairs, not to mention what else may have been left in disrepair due to a lack of funds.

That is my 2 cents.
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Old 07-13-2008, 11:26 AM   #4
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Please advise: buying a house without permits?


I agree, walk away. If the work isn't completed, there is a high probability that the local inspections department will require it to be brought into compliance. Some cities will, some won't.

You need to make two phone calls if you're truly considering this. One call to the city to ask straightforward questions, and one call to your insurance agent.
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Old 07-13-2008, 11:38 AM   #5
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Please advise: buying a house without permits?


Walk away. Another thing that can bite you BIG TIME is if there are liens on the house. You would also assume these. Liens are something that are checked for when buying a house the conventional way, but auctions and some repos are not. You could be forced to update to current code if you buy it.
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Old 07-13-2008, 11:43 PM   #6
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Please advise: buying a house without permits?


Thx for all your views.

KCTermite, I read on another post that when you caught unpermitted work in progress, you made them correct it.

But, what do you (and other inspectors) do when the work in question is completed and from a prior owner? How often do you see these cases, and what action do you take?

Thanks!

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Originally Posted by thekctermite View Post
I agree, walk away. If the work isn't completed, there is a high probability that the local inspections department will require it to be brought into compliance. Some cities will, some won't.

You need to make two phone calls if you're truly considering this. One call to the city to ask straightforward questions, and one call to your insurance agent.
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Old 07-15-2008, 03:49 PM   #7
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Please advise: buying a house without permits?


This is a subject of great debate!

It boils down to the property owner's responsibility for non-compliant work, simply by ownership. Even if you didn't do the work and bought the house the way it is, many jurisdictions will act on their right to require the structure to meet code and ordinance. If additions were made or work was done without the oversight of the city (permits and required inspections), the city has a right to tell the owner to take it down, etc.

When I catch work going on without a permit, my job is easy. That's a no-brainer. The crews are given a few minutes to leave the site and fines are issued to the owner and contractor.

When I go into a house and realize that work was done some time ago without a permit, but the owner has been there forever, that's tougher but still manageable. We can use all sorts of info at our disposal to gain compliance, but I have to be able to prove that work was actually done since the structure was built. Usually it is easy stuff like new swimming pools, room additions, etc.

When I am dealing with someone that bought a home and "inherited" these problems, that's when I get conflicted and things get hairy. Where I work, there's no sympathy for buying a property with illegal work, compliance orders, etc. The issues transfer when the ownership transfers.

I posted this question on a codes discussion forum and got a splattering of different answers from different people across the nation. It totally depends on the jurisdiction.
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Old 07-15-2008, 03:53 PM   #8
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Please advise: buying a house without permits?


This is happening a lot now that owners and builders are working on homes, "flipping" homes, and going broke. We're starting to see a lot of foreclosed properties that were being worked on (many with permits), but the scope of the project grew in scale after the permits were issued. Many of the permitees don't get that additional work permitted, and it is costing the new owners of the properties that are trying to finish the half-completed projects.

I've been in a lot of meetings with new owners to try to get everything on the level before they start working or continue someone else's work. When you're proactive, the city is likely going to be easier to deal with than if we catch you hiding things or breaking the law.
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Old 07-16-2008, 11:18 AM   #9
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Please advise: buying a house without permits?


I have just bought a house and while not completely similar to your situation, I can tell you about how big of a pain it is.
The house was bank owned...Fannie Mae actually.
The entire process from original offer to closing took almost 5 months.
There weren't any code issues, per se. However, simple things like a balance on the water bill account took months to rectify. Luckily I knew a local alderman that helped push my issue through. I didn't get any special favors other than having my issue brought to the front.
Another BIG issue was since the house was being sold "as is" there were a few problems I was aware of. Nothing major....a/c wasn't working, no appliances, no water heater, broken window. While these things weren't an issue for me, the mortgage company wasn't so happy. As we all know, mortgage companies are taking it in the kazoo as of recently and they are being extremely picky about lending money now. They didn't want to lend me the money on a "broken" house. So mortgage company wouldn't lend me the money but it was being sold as is so NO ONE was able to fix anything. I pulled some serious strings to get access to the house to make the repairs BEFORE I was able to close on it. Mind you, if something would have happened and I didn't get the mortgage, I WOULD HAVE BEEN OUT THE COST OF EACH AND EVERY REPAIR I MADE TO THE HOUSE.

While buying any house with "issues", you have to take into account how tough it's going to be to get through the red tape. Even if you have the resources to get the house to code or pass inspection, how long will that take? Will a mortgage company even lend you the money to buy it? Will you even be able to get a certificate of occupancy?
If it took me 7 weeks to get an existing balance on a water bill paid (only $250), how hard will it be for you to get a code violation through?????

If you forge ahead, plan on the process taking at least 6 months, if not more

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