Home Selling in Irvine>Question Details

Nica Chen, Real Estate Pro in Newport Beach, CA

How would you handle a listing that has been remodeled with extra room and sf but not being recorded by the city/county?

Asked by Nica Chen, Newport Beach, CA Thu Oct 3, 2013

Help the community by answering this question:


There are a number of variables here – starting with whether or not the seller actually knows whether or not the extra square footage was built without permits. Here are the scenarios:

1. If the seller KNOWS it was built without permits, then they have two options:

a. Attempt to rectify the situation with the county/city building officials. This can be a very expensive proposition and could even result in a mandate from the local building officials to remove the illegally built addition.

b. Put it on the market “AS-IS” as far as the addition is concerned and publically disclose that the addition was built without permits. This pushes any liability onto the new owner. (See “Permits – Part 3 – Seller” below for full details)

2. If the seller does NOT know whether or not it was built with permits – perhaps they purchased it like it currently is – then there are a couple of options:

a. Simply put it on the market showing the property configuration as shown in the tax records (# BR/BA and SQ/FT) and disclose, “Actual square footage and room configuration does not match county records. No warranty made as to whether or not addition was built with permits – buyer to verify.” This puts the onus on the buyer to verify whether or not the addition was made with permits – it will mean they assume the responsibility of checking with local building officials and, if they buy, any liability regarding the legality of the structure passes to them. As their agent, DO NOT perform any investigation with the city/county yourself – your role is to sell the property, NOT investigate potential illegality/liability. If you DO investigate, then responsibility to disclose moves to you, and would put you in a legally responsible position AND a potential breach of your fiduciary responsibility to the seller.

b. The seller could choose to investigate whether or not permits were obtained. If they find out they were NOT, then Option 1 above kicks into place since they now KNOW. If they (i) find out they WERE and that (ii) the addition was completed and (iii) finalled by the local building officials but (iv) the county subsequently failed to properly record the extra square footage, then they can file to have the extra footage legally added so it’s properly included in the county records. Once it’s in the county records, you can include it in the MLS and ask a higher price commensurate with the additional footage. As you can see, this option comes with a lot of potential risk AND/OR reward for the seller. Normally, I just recommend option 2. a.

Here are a few posts dealing with work done without permits that may be helpful:

Permits – Part 1 – Buyer
You TOO Can Purchase A Ticking Time Bomb! One Easy Step!

Permits – Part 2 – Buyer
What Might Your Next Home Purchase Have In Common With The Titanic? 7 Key Recommendations

Permits – Part 3 – Seller
3 Things You MUST Do To Get Your Albatross To Land Successfully…
2 votes Thank Flag Link Fri Oct 4, 2013
Disclose, disclose, disclose......and work with the square footage on the tax records. Contacting the local department of taxation to get their take on this would be strongly advised.

Good luck,

2 votes Thank Flag Link Fri Oct 4, 2013

I assume that you are a Realtor or professional real estate representative and that you have this new listing or are considering taking it.

Your seller is obligated to reveal all known facts to the buyers that would be material to their decision to buy (see Easton v. Strassburger).

The seller is also obligated to provide true and correct information on the MLS listing about the property for buyers and their agents to see and consider. If there was such an improvement and the seller does not know whether it was building permitted, that fact must also be revealed.

If the home has been remodeled with an extra room, a building permit would be required in most Orange County cities and areas. If there was no building permit pulled for that improvement or remodel, this fact must be revealed in advance to prospective buyers.

As Realtor and/or agent for the seller, you are also obligated to provide this information to prospective buyers by including it in the MLS.

Harrison K. Long, Realtor and broker associate, Coldwell Banker Previews
CA BRE 01410855
2 votes Thank Flag Link Thu Oct 3, 2013
This is all good information. You should be talking with your broker as well for advice. The broker is the one who would help you in case something goes wrong or a problem arises about this as the brokerage could be involved too.
A lawsuit maybe. Your broker would want to know and advise you
All good advice. Good luck

Ingrid Ski Realtor
1 vote Thank Flag Link Fri Oct 4, 2013
First and foremost, both the MLS listing and the seller's disclosure must state IF the room was added without permits. Note that I said IF. You don't state if this is your home or you are an agent or a buyer. Sometimes the County records do not show the updated square footage, even though the addition was done with permits. In that case, furnish a copy of the signed off permit to the buyer.
If the addition was truly unpermitted, obtaining permits after the fact could be tricky. You should talk to the city building department to find out the procedure and cost.

Often owners do not obtain permits to save money, not realizing that this strategy will cost them more in the future.
1 vote Thank Flag Link Fri Oct 4, 2013
You need to advise your seller to disclose the information or go to the town and make it right by getting the permit or approvals they should have had to start,.
1 vote Thank Flag Link Fri Oct 4, 2013
I also agree with Bill. Make sure the sellers disclose this information then use the current tax information. Good Luck!
1 vote Thank Flag Link Fri Oct 4, 2013
Bill Eckler gave you excellent advice! I recommend you follow it. Thumbs up for Bill.
1 vote Thank Flag Link Fri Oct 4, 2013
Good answers
Have you spoken to your broker on wht you should do. They are your best asset or should be

Good luck
0 votes Thank Flag Link Mon Oct 14, 2013
Remember a few things:

1. When you sell you will have to find a buyer OK with the non-permitted addition.
2. The appraisal will not include the non-permitted square footage
3. The insurance company may not insure non-permitted square footage
4. The lender will want the appraiser to comment that the work was done in a "workmanlike manner"

But it is pretty common for older houses to have non-permitted additions.
0 votes Thank Flag Link Mon Oct 14, 2013
SF that is not recorded with the city/county is an unpermitted addition, and will not add value to the home during the appraisal, and depending on the addition and the city may have to be brought up to cod or even torn down.

Kawain Payne, Realtor
0 votes Thank Flag Link Mon Oct 14, 2013
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