Tough New Rules About Permitting
Up until a few months ago, the pre-printed contracts used by real estate agents to sell houses were about 5 pages long. Known as the FAR/BAR contract, the new contract is now 11 pages of lawyer-speak that will absolutely put an insomniac to sleep.
One of those new rules, however, might keep you up at night if -- like some people -- you had work performed on your property that was never permitted.
Here's the first part of the new rule. It reads: EXCEPT AS MAY HAVE BEEN DISCLOSED BY SELLER TO BUYER IN A WRITTEN DISCLOSURE, SELLER DOES NOT KNOW OF ANY IMPROVEMENTS MADE TO THE PROPERTY WHICH WERE MADE WITHOUT REQUIRED PERMITS OR MADE PURSUANT TO PERMITS WHICH HAVE NOT BEEN PROPERLY CLOSED.
In other words, if you're the seller you are guaranteeing that all permits were pulled and properly closed out when the work was done. It doesn't matter if the property being sold was a single family home, condo or an investment property.
This is not something you want to mislead buyers about. If something looks fishy, all the buyer or his agent has to do is go down to the building permit office and ask for what is known as a "property card". The property card lists all the work done to the property since it was built for which a permit was pulled. If the buyer sees something that was done at the property and there is no record of the permit having been pulled, well, you may have a problem.
The buyer is within his rights to do this research.
Another new section to the contract states very clearly that the buyer may have an inspection of all the records and documents made to determine if there are any open or expired building permits or any unpermitted improvements to the property. This is now known as the "Permit Inspection", and it's part of the new contract. I would think that most buyers will now make this a standard part of their due diligence when buying property.
If you are the seller, you will be given only five (5) days to have an estimate prepared to remedy the permitting problem(s). Then, no more than five (5) days prior to closing, the seller will have to get the open and expired building permits closed by the appropriate governmental entity, and obtain and close any required building permits for improvements made to the property. There are other provisions involved in this part of the new contract, but ultimately if this permitting matter is not attended to in a timely manner, the contract could be cancelled with a full refund of the buyer's deposit.
Here's my advice on this matter. If you're a seller and you know that non-permitted work was done on property you want to sell, get it corrected before you even talk to a real estate agent about listing your property. If you don't know for sure if the permit was pulled, or if you don't know if a permit needed to be pulled, call your local building codes or permitting office and ask them. Finally, if you're thinking about having some work done on your property, call the permitting department in your city to find out if the work requires a permit -- even if it will be a do-it-yourself project. You will be a lot better off getting this matter squared away before you put the property under contract than afterwards.
-30-
One of those new rules, however, might keep you up at night if -- like some people -- you had work performed on your property that was never permitted.
Here's the first part of the new rule. It reads: EXCEPT AS MAY HAVE BEEN DISCLOSED BY SELLER TO BUYER IN A WRITTEN DISCLOSURE, SELLER DOES NOT KNOW OF ANY IMPROVEMENTS MADE TO THE PROPERTY WHICH WERE MADE WITHOUT REQUIRED PERMITS OR MADE PURSUANT TO PERMITS WHICH HAVE NOT BEEN PROPERLY CLOSED.
In other words, if you're the seller you are guaranteeing that all permits were pulled and properly closed out when the work was done. It doesn't matter if the property being sold was a single family home, condo or an investment property.
This is not something you want to mislead buyers about. If something looks fishy, all the buyer or his agent has to do is go down to the building permit office and ask for what is known as a "property card". The property card lists all the work done to the property since it was built for which a permit was pulled. If the buyer sees something that was done at the property and there is no record of the permit having been pulled, well, you may have a problem.
The buyer is within his rights to do this research.
Another new section to the contract states very clearly that the buyer may have an inspection of all the records and documents made to determine if there are any open or expired building permits or any unpermitted improvements to the property. This is now known as the "Permit Inspection", and it's part of the new contract. I would think that most buyers will now make this a standard part of their due diligence when buying property.
If you are the seller, you will be given only five (5) days to have an estimate prepared to remedy the permitting problem(s). Then, no more than five (5) days prior to closing, the seller will have to get the open and expired building permits closed by the appropriate governmental entity, and obtain and close any required building permits for improvements made to the property. There are other provisions involved in this part of the new contract, but ultimately if this permitting matter is not attended to in a timely manner, the contract could be cancelled with a full refund of the buyer's deposit.
Here's my advice on this matter. If you're a seller and you know that non-permitted work was done on property you want to sell, get it corrected before you even talk to a real estate agent about listing your property. If you don't know for sure if the permit was pulled, or if you don't know if a permit needed to be pulled, call your local building codes or permitting office and ask them. Finally, if you're thinking about having some work done on your property, call the permitting department in your city to find out if the work requires a permit -- even if it will be a do-it-yourself project. You will be a lot better off getting this matter squared away before you put the property under contract than afterwards.
-30-
posted by Terry Ward at 1:18 PM
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