Should you buy a house that was remodeled without permits
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Should you buy a house that was remodeled without permits

By Chicago_Guy following x   2017 Jul 23, 6:03am 1,186 views   11 comments   watch   quote     share  


I am contemplating buying a single family home (approximately $2.2 Million) located in the Bay area peninsula for my 30 year old daughter. If purchased, I will hold the property title in joint tenancy with spouse. Home was built in 1992 and in 2004 the 75+ year old owners added a 100 square foot addition that was not permitted off the kitchen. Also, there is a 500 sq ft granny unit attached at one wall of the detached garage at rear of property that was built in 2004 and is not permitted. Per daughter this was disclosed verbally by the sellers agent at the open house. And will also be included in the written disclosures when made available. The MLS listing does not include the square feet of the kitchen remodel nor the granny unit. The seller agent and my buying agent are telling me this not unusual in the California market. I have always done everything by the book and this doesn't sit well with me who has always lived in the midwest and followed city permitting requirements. Also, kid would want to rent the granny unit, but I am very concerned about the liability I would take on if the renter was injured in a fire in an unpermitted unit. I also don't know if I could retroactively permit the remodel and granny unit with the city building inspection department Daughter loves this place after looking for 18 months.

#housing

1 BayAreaObserver   ignore (1)   2017 Jul 23, 6:21am   ↑ like (4)   ↓ dislike (0)     quote        

Here is a link to your situation that is California specific and involves a similar situation in San Francisco.

http://www.latimes.com/business/realestate/la-re-bypass-permits-story.html

As for liability if you don't already have an "umbrella liability policy" I would get one asap for far more than the usual amount, should you go down this path.

If you can afford to buy your daughter a house in this price range, you may (will) be better off long term to look some more and find something without all the potential liability and permitting issues. Then again I am projecting Midwest values and concerns as well as yourself.

Might be a good thing to take the "emotion" part out of the equation and focus more on the nuts and bolts and potential pitfalls - there will be another house she will "love" even after 18 months of looking. The best part of looking - it doesn't cost anything.

2 someone else   ignore (0)   2017 Jul 23, 6:38am   ↑ like (1)   ↓ dislike (0)     quote        

Chicago_Guy says

I also don't know if I could retroactively permit the remodel and granny unit with the city building inspection department

I believe you can indeed. Might depend on which city. Get an inspector to look at it and tell you.

I know a guy who built an illegal backyard fireplace, but when neighbors complained, he had an inspector look at it and got it up to code.

3 mmmarvel   ignore (0)   2017 Jul 23, 7:25am   ↑ like (6)   ↓ dislike (0)     quote        

Chicago_Guy says

I also don't know if I could retroactively permit the remodel and granny unit with the city building inspection

As someone who works as a building inspector (and has in several jurisdictions) will tell you that it really depends on the jurisdiction and what kind of a day the inspector has had. I've worked some jurisdictions where 90% an addition/remodel without a permit would be torn down or hit with so many corrections that it was cheaper to tear it down and start over than try to comply with the corrections. You will be hit with an increased building permit fee (anywhere from 1.5 times the usual fee to 3 times the usual fee). The building/addition will be required to meet today's code, not the code for the year that it was supposedly built and a LOT has changed from the 2004 code. Even IF you pay the permit fee and pay for ALL the remodeling to get them up to code, this type of building is frowned upon by many inspectors, meaning they can (and do) walk in with a bit of a chip on their shoulder. They can (and will) look for the slightest discrepancy and write you up for it. By the same token, you might end up with a rookie inspector who doesn't know his rear end from a hole in the ground and will pass anything just to get on with his day. However, typically (95% of the time) they will send in someone with lots of experience who will make DAMN sure the building/addition is up to present day code. Use this as a bargaining chip, I'd knock a half a million off the purchase price because it could cost close to that to make it legal with the city. Just my two cents worth. Yeah, building without a permit is not looked kindly upon.

4 bob2356   ignore (1)   2017 Jul 23, 8:19am   ↑ like (4)   ↓ dislike (0)     quote        

Chicago_Guy says

The seller agent and my buying agent are telling me this not unusual in the California market.

You are listening to people who have conflicting financial interest in giving you this advice. What did the building inspector say? He is the one that works for you. I would make the seller correct it or move on. But I don't love houses, I sleep in them or rent them out.

5 KimJongUn   ignore (0)   2017 Jul 23, 8:39am   ↑ like (1)   ↓ dislike (0)     quote        

Warren Buffet wouldn't buy his daughter a $2.2M house.

6 SFace   ignore (0)   2017 Jul 23, 10:09am   ↑ like (0)   ↓ dislike (0)     quote        

If it was done with permits, 2.2m would be closer to 2.5m.

You are buying as is. If you want the benefit of the new space on record, them you'll to permit it.

Renting an unpermitted space is the issue. Think renter pays 5k in rent complains of health and there you go 200k out the door.

7 Strategist   ignore (0)   2017 Jul 23, 10:43am   ↑ like (0)   ↓ dislike (0)     quote        

Straw Man says

Warren Buffet wouldn't buy his daughter a $2.2M house.

Warren Buffet wouldn't buy himself a $2.2 million house.

8 rdm   ignore (0)   2017 Jul 23, 11:00am   ↑ like (0)   ↓ dislike (0)     quote        

What is true is that there is an huge amount of un permitted work done in the bay area. Some jurisdictions now require a pre-sale city inspection. Anything unpermitted and or not up to code has to be brought up to code and permits paid or agreed by the buyer to be brought up to code by the buyer, before the sale can go through. This protects the buyer, but the main reason IMO is to get more fees. i expect this to be more and more common. So, even if this isnt the case where you are buying, it could be by the time your daughter sells in which case even though the work was done before she/you bought she/you would be responsible. This issue was litigated in San Rafael recently.

9 KimJongUn   ignore (0)   2017 Jul 23, 11:07am   ↑ like (0)   ↓ dislike (0)     quote        

Strategist says

Straw Man says

Warren Buffet wouldn't buy his daughter a $2.2M house.

Warren Buffet wouldn't buy himself a $2.2 million house.

If he lived in SFBA he probably would. But he wouldn't live in SFBA.

10 HEY YOU   ignore (7)   2017 Jul 23, 1:56pm   ↑ like (0)   ↓ dislike (0)     quote        

Chicago_Guy says

(approximately $2.2 Million)

This is America! one must pay $2.8 or forever be known as a loser.

BayAreaObserver says

without all the potential liability and permitting issues. T

But this is the house I muuust have!

11 mmmarvel   ignore (0)   2017 Jul 24, 9:01am   ↑ like (0)   ↓ dislike (0)     quote        

rdm says

Some jurisdictions now require a pre-sale city inspection. Anything unpermitted and or not up to code has to be brought up to code and permits paid or agreed by the buyer to be brought up to code by the buyer, before the sale can go through.

A couple other things to note - if you're going through a lender, they WILL require an inspection for assessment and insurance purposes - at that point the un-permitted work will be discovered and pointed out. Second, even if it's a cash deal, if there is a fire in the un-permitted area, the insurance company can (and will) refuse to pay based on that. Finally, if and when the work is done and everything is 'up-to-snuff' and legal ... your assessment will go up, thus the property taxes will go up.


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