Home Buying in Los Angeles>Question Details

Writerxyz, Home Buyer in Los Angeles, CA

Got a counter on short sale w/ unpermitted room I offered on. Not sure my agents explaining/understanding. Seems standard to me. Not sure who to ask?

Asked by Writerxyz, Los Angeles, CA Wed Aug 4, 2010

Feel like my agent is steering me away since it might get complicated. But not sure sellers addendum is as bad as my agent says. It mentions buyer to verify sq ft and building permits. (den, carport and workshop behind garage are not permitted) Seems lots of people have rooms not permitted, they bought that way and never did a thing. Maybe I just visit code people in Inglewood and ask how bad it is and what it means?

And then that lien holders will pay costs, not sellers (taxes or liens). My agent said it means I will be liable for their unpaid taxes or liens. I just don't read it that way.

Thank you! Buying my first home, 6th offer and thought I was knowledgable, but short sales and unpermitted rooms are all new.

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So long as the listing agent is negotiating it correctly, banks ARE paying seller back property taxes. You should not be paying for that.

Good to get this permit issue out of the way now,,hopefully you didn't wait months for the short sale to be approved & then only now are you checking into this. Talk to the owner, talk to the city, get the info you need now about these unpermitted rooms, talk to your own lender too about their guidelines, if any, for this situation.

I also strongly suggest you have your lender order an appraisal for your own loan now, talk to the appraiser about the unpermitted rooms & how it affects the appraisal, submit all that info including the actual report to the short selling lender. It will help you to get a lower price.

EmilyKnell1@yahoo.com
562-430-3053cell
0 votes Thank Flag Link Thu Aug 5, 2010
You are correct when you describe your situation as "complicated". Even if you buy the property without permits, it will be difficult to resell it down the line.
There are several things to be concerned about:
1. What are the dates (commencement and completion) of the construction? This information gives you a good idea of what codes the addition was built under, in the very best of circumstances.
2. Was the work done by a licensed contractor?
3. Is there a set of plans to support the remodel, drawn by an architect or engineer? Does the completed work match the plans? (see #4 and 5 next)
4. Does the physical structure of the remodel (walls, windows, ceiling heights, etc) conform to current codes? Was anything necessary for code) removed, altered or diminished to create the new bath? (Such as a garage or a setback)
5. Do the underlying systems (plumbing, heating, electrical, drainage) conform to current codes?
Once you have answered the above, in order to obtain permits, you must do some or all of the following:
1. You will need a current set of plans to be approved by your local building and safety. They will need to be drawn and submitted by an authority recognized by your building and safety department.
2. You'll need to pay any necessary fees, local taxes, and fines in order to obtain your permit.
3. You will then have a series of inspections based on the scope of the work necessary to bring your project to current code.
4. You may need to open walls, remove fixtures, etc. to assure the inspector that the work done is to code.
The risk in accepting the property without a permit? If you, or anyone you sell the property to down the road, decide to add on or remodel, and the inspector discovers the un-permitted work, you may be asked to bring it to code as part of the scope of the work, before they will issue a certificate of occupancy on any future remodel.
Deborah Bremner
REALTOR, 00588885
ABR, CDPE, eAgent, CSP, SFR, HRC, CRE
(O) 310-571-1364 DIRECT
(D) 818.564.6591
http://www.thebremnergroup.com/news/
1 vote Thank Flag Link Tue Aug 17, 2010
The best thing to do is to go directly to the city and check yourself what is permitted and what is not. You can hire some one to do this, or your agent can check for you.

If the room is unpermitted 2 things to really consider:

1. there will be no value added to the unpermitted space when an appraisal is done
2. If the city finds outy that there is an unprmitted space. they may make you tear it down or make it legal.

Its is your choice, definatley your agent should disclose the pros an cons. Some sellers probably boght the house like that, and nothings has happend.

Again go to the city records and they sould be able to help you ..

OBJECTIVE REAL ESTATE
6399 WILSHIRE BLVD SUITE 908
LOS ANGELES, CA, 90048
Office: 213-417-3898
Cell: 310-486-2132
Fax: 877-310-3002
http://www.objectivere.com
0 votes Thank Flag Link Wed Mar 21, 2012
Excellent response Debora! .... Happy funding, Rudi
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Tue Aug 17, 2010
It depends on what type of loan you are using to finance the property. Tons of real estate agents do NOT understand anything about financing. It's amazing to me. And I am NOT saying that your agent doesn't. Your question is alittle vague. If you are buying this all cash, then it's not an issue. Or if you are buying this with a conventional loan it really isn't an issue unless you just want want to know for peace of mind, exactly how much square footage is REALLY permitted legally. But if you are buying this with an FHA loan,then unpermitted rooms or additions or converted garages can be a financing issue. Usually, if the unpermitted area is done in a "workmanlike manner", that should suffice. But if like a garage has been converted to living quarters, and has a stove??? The gas line will have to capped off in order to pass the appraiser's rules on FHA financing. And when it says buyer to verify sq ft and permits, go to the city, it will tell you actual sq footage that is permitted and any other permits is may or may not have, so you will know for sure. So if den, carport and workshop are NOT permitted, these areas can NOT be included in the legal sq footage of the house. That's all. Whoop dee doo!!! Now if you want to have them increase your legal square footage, go to the city and apply for permits. An inspector will come out to see if they are up to code and if work was done in a workmanlike manner. If not, he or she will make recommendations on repairs that have to be done in order to pass code, and once repairs are done, then they will make another appearance to sign them off and give you your permit or permits. It's that simple. Lien holder part is vague, but usually buyer is not responsible and it says lien holders will pay costs. You can talk to a real estate attorney for advice is still confused.
Web Reference: http://www.shysells.com
0 votes Thank Flag Link Tue Aug 10, 2010
That's why you have an Agent. To give you advice. They have a Fiduciary Responsibility to you. Consult a Real Estate Attorney if you wish Legal Advice. Hopefully, you are an All Cash Buyer. If not, look for something else. ..... Happy funding, Rudi
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Tue Aug 10, 2010
With all transactions you should cover your bets and make sure you inspect and conduct all investigations you feel necessary to satisy yourself. In regards to permits you can stop by the city and ask what permits have been pulled for the particular property. That will help you determine whether or not the items in question are or are not permitted. The seller is only trying to protect themselves by writing big word disclosures like the ones you mentioned above. Refer to the TDS once you are in escrow it will also divulge information the seller knows about. With that said some sellers may have lived their whole life in the home and not know all that's going on with the home, so again inspect inspect inspect! GOOD LUCK
Web Reference: http://www.BENNYCHAVEZ.com
0 votes Thank Flag Link Tue Aug 10, 2010
Un-Permitted additions can sometimes be easily corrected and sometimes they must come down, before you sign have an ICC code inspector take a long good look especially the foundation.

It all depends however you may have to pay if the seller won't haggle.
Web Reference: http://www.CAcertified.com
0 votes Thank Flag Link Thu Aug 5, 2010
Mr. Seller is also probably in a financially strapped position & will likely not be able to pay to get these rooms permitted. you need to find out what the costs are. Depending on the situation of what your offer price is to the bank vs. comparable sales, it may be possible to get the short selling bank to contribute in this, so long as the case can be presented to them so as to show them that the selling it as a short sale now, is going to be financially better for them, then allowing the home to go to auction.

EmilyKnell1@yahoo.com
562-430-3053cell
0 votes Thank Flag Link Thu Aug 5, 2010
100% Agree with Richard...when we as agent went to school for our license and then Brokers license, one of the first things they teach is know what you don't know! Here in AZ we could (as resale agents) list and sell commercial properties, most of us don't because we just don't understand it or had the training to complete a transaction correctly. This applies to short sale, bank foreclosures and rental management.
0 votes Thank Flag Link Thu Aug 5, 2010
There are many agents that just do not have enough experience or patience to work shortsales. I am not knocking anyone, just stating the obvious... a lot more work and no guarantee of getting paid. I happen to specialize in short sales and as a buyer, you need to keep in mind that you are buying a property "as-is" The lender will not make repairs or give credits. True, there are many properties that have unpermitted work and depending on what it is, you may not be able to get financing. If you are an all cash buyer, you are accepting the property as is, just know, that if the city ever inspected, you may have to bring the items up to code at your cost. Yes, the lender is expected to pay the taxes and liens that show up on the title, but depending on the lender, they may try to pass those cost on to the buyer, but traditionally, the seller (lender) will pay these as part of the settlement for shortsale. It takes a lot of patience to work and navigate through a shortsale, but when you get it, it can be very rewarding. Happy to assist.
Sincerely,
Richard "RJ" Kas (SFR, SRES)
"Representing the finest properties from Los Angeles worldwide"
KAS Properties - Coldwell Banker Previews International - Beverly Hills East
9388 Santa Monica Blvd, Beverly Hills, CA 90210
310.859-5334 office - 310.488.9826 mobile - 310-273-0670 fax ATT: RJ
RichardKas@gmail.com - http://www.RJforLA.com - DRE: 01352771
Sellers Buyers Investors Leasing Consulting
0 votes Thank Flag Link Thu Aug 5, 2010
Hopefully you have done your buyer investigatio and checked out the story on the expansion. Just because "tons of people have rooms not permitted" doesn''t make it right or SAFE. There's a very good reason why permits are required, specially for structural changes. If they are not done to code they may pose serious health and safety hazards.

What does the approval letter say? If the short sale lender won't pay for seller's taxes or liens, the sellers should be the first to be asked for contributions to pay their own taxes and the other shortfall. And what other liens are there? Unpaid HOA dues? Unpaid utilities? Will these liens be cleared at escrow?

You'd better take a close look at the estimated HUD statement to see the shortfall after the short sale lender is paid off....Are you paying below market? Do you have funds to contribute to the shortfall?

Is it worth it to you? What does your gut tell you is the right and smart thing to do?

Listen to your agent. Remember that the agent is looking out for your interests. You being a first time home buyer, you need all the guidance and caution to make your first experience as hassle free and as smooth as possible.

Good luck!
0 votes Thank Flag Link Wed Aug 4, 2010
You should know that you won't get financing on this property. Unless you are paying cash, this is a bad move.
0 votes Thank Flag Link Wed Aug 4, 2010
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