Author Topic: Unpermitted remodel  (Read 1119 times)

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Offline incrediblehau

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Unpermitted remodel
« on: April 13, 2021, 09:37:21 PM »
Is it a bad idea to buy a home with unpermitted renovations.


Two bathrooms with plumbing and electrical reshuffling was done, no additional sq ft added.

Is there a way to go through with escrow, then go to the city for permitting and if the work was not up to code and require extensive revamping to go back k to the seller if the amount of repairs exceed “X” amount of dollars

Offline eyephone

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Re: Unpermitted remodel
« Reply #1 on: April 13, 2021, 09:51:05 PM »
Yes, bad idea. If you live in HOA, I assume you have to get the hoa approval. Since it sounds like they changed the design of the layout. (Plumbing and electric) Idk

When the city inspector looks at it they might make a person redo the work or show that it safe. (For example: Remove the dry way to show the electrical. For the area that was changed.)


Offline Liar Loan

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Re: Unpermitted remodel
« Reply #2 on: April 14, 2021, 11:01:54 AM »
Is it a bad idea to buy a home with unpermitted renovations.


Two bathrooms with plumbing and electrical reshuffling was done, no additional sq ft added.

Is there a way to go through with escrow, then go to the city for permitting and if the work was not up to code and require extensive revamping to go back k to the seller if the amount of repairs exceed “X” amount of dollars

Anything can be negotiated, but normally a seller is not going to agree to be held liable for something after closing.  Your best bet is to use it as negotiating leverage; Either demand that the seller get permits or ask for a discount to offset your risk.  In today's market, the seller may not agree though.

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Offline eyephone

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Re: Unpermitted remodel
« Reply #3 on: April 14, 2021, 11:46:14 AM »
Is it a bad idea to buy a home with unpermitted renovations.


Two bathrooms with plumbing and electrical reshuffling was done, no additional sq ft added.

Is there a way to go through with escrow, then go to the city for permitting and if the work was not up to code and require extensive revamping to go back k to the seller if the amount of repairs exceed “X” amount of dollars

Tbh: I don’t know if it is something small like adding sprinkler system in the backyard or a complete makeover since you said plumbing and electrical.

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Offline incrediblehau

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Re: Unpermitted remodel
« Reply #4 on: April 14, 2021, 02:15:16 PM »
Made one bathroom smaller, extended the masters bathroom, and made a walk in closet. Masters bathroom has shower/tub, toilet, and sinks moved. Definitely requires a permit imo

I am still interested in the property and as far as I know, guy still wants to sell.


Offline incrediblehau

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Re: Unpermitted remodel
« Reply #5 on: April 14, 2021, 02:37:53 PM »
Is it a bad idea to buy a home with unpermitted renovations.


Two bathrooms with plumbing and electrical reshuffling was done, no additional sq ft added.

Is there a way to go through with escrow, then go to the city for permitting and if the work was not up to code and require extensive revamping to go back k to the seller if the amount of repairs exceed “X” amount of dollars

Anything can be negotiated, but normally a seller is not going to agree to be held liable for something after closing.  Your best bet is to use it as negotiating leverage; Either demand that the seller get permits or ask for a discount to offset your risk.  In today's market, the seller may not agree though.

What’s a fair “X” amount to negotiate?

The worst case scenarios are obviously if the city doesn’t grant a permit or the inspector comes and says the work is bad and we have to redo a lot of stuff.

Is the city more lenient with remodels that have occurred from prior homeowners?

Offline eyephone

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Re: Unpermitted remodel
« Reply #6 on: April 14, 2021, 08:29:49 PM »
Made one bathroom smaller, extended the masters bathroom, and made a walk in closet. Masters bathroom has shower/tub, toilet, and sinks moved. Definitely requires a permit imo

I am still interested in the property and as far as I know, guy still wants to sell.

I came across the forum below that talks about unpermitted work that may cause appraisal issues.

https://appraisersforum.com/forums/threads/unpermitted-work-alternations-causing-appraisal-issues.214924/page-2

Offline incrediblehau

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Re: Unpermitted remodel
« Reply #7 on: April 14, 2021, 10:07:12 PM »
Just found out from selling party that he has no drawings/plans/pictures/diagrams of the work that was done.

He has an invoice listing the work that was done. I do not think this is sufficient to get a permit pulled.

What are my options to rectify the situation given my circumstances.


Offline eyephone

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Re: Unpermitted remodel
« Reply #8 on: April 14, 2021, 10:15:05 PM »
Just found out from selling party that he has no drawings/plans/pictures/diagrams of the work that was done.

He has an invoice listing the work that was done. I do not think this is sufficient to get a permit pulled.

What are my options to rectify the situation given my circumstances.

Tell him to get it permitted.

Offline USCTrojanCPA

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Re: Unpermitted remodel
« Reply #9 on: April 15, 2021, 09:01:49 AM »
Just found out from selling party that he has no drawings/plans/pictures/diagrams of the work that was done.

He has an invoice listing the work that was done. I do not think this is sufficient to get a permit pulled.

What are my options to rectify the situation given my circumstances.

Tell him to get it permitted.

That could take months.  Another option is to do a holdback of net seller proceeds until the permits are obtained, that's good incentive for the seller.
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Offline Soylent Green Is People

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Re: Unpermitted remodel
« Reply #10 on: April 15, 2021, 09:54:21 AM »
I had a cancelled escrow where the buyers discovered unpermitted work was done on the home they had under contract. The seller knew of the unpermitted work and even had a "hold back" from the previous seller when they bought. These held back funds were to bring the work to city code but was never done. To this day, roughly 3 years have passed and those funds remain in an escrow account with no clear way forward to "legalize" the property.

The current owner of the property is now litigating against the knucklehead contractor who performed the work for the previous seller. No news if the $$$ still held back is going to be deployed to fix the issue. Sheesh, imagine putting those funds into FANG stocks 3 years ago.... 

The moral of this story - Avoid buying a property with permit issues unless you have the time, money, and expertise to cure.

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Offline eyephone

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Re: Unpermitted remodel
« Reply #11 on: April 15, 2021, 10:07:01 AM »
Just found out from selling party that he has no drawings/plans/pictures/diagrams of the work that was done.

He has an invoice listing the work that was done. I do not think this is sufficient to get a permit pulled.

What are my options to rectify the situation given my circumstances.

Tell him to get it permitted.

That could take months.  Another option is to do a holdback of net seller proceeds until the permits are obtained, that's good incentive for the seller.

Just giving him an option. Tbh, I am doing the buyer a favor.
The buyer can say the seller must remedy all unpermitted construction as a condition of the sale.


Offline zovall

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Re: Unpermitted remodel
« Reply #12 on: April 15, 2021, 10:40:14 AM »
What happens if the work never gets permitted? Are there fines that the city imposes or does life just go on?

Offline USCTrojanCPA

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Re: Unpermitted remodel
« Reply #13 on: April 15, 2021, 01:29:12 PM »
What happens if the work never gets permitted? Are there fines that the city imposes or does life just go on?

No city fines typically, just no adjustment to the county records for bedroom/bathroom/SF count.
Martin Mania, CPA
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Offline incrediblehau

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Re: Unpermitted remodel
« Reply #14 on: April 15, 2021, 04:22:16 PM »
i appreciate everyones feedback

spoke to someone from the city who said since no plans are availible, i'd have to hire an architect or a structural engineer to come up with the plans. called a structural engineer who says they charge $1,200 for an inspection (not including drawings).

i want the house, the seller doesn't care to get his work permitted, so its pretty much take it or leave it kind of deal  :-\

 

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