We recently began a short escrow process on a home in Anaheim, CA. In escrow now, the listing relator

Asked by Kim, Wed Feb 27, 2008

has just revealed that the master bedroom w/ bathroom is unpermitted and the awning over the patio is unpermitted. The house was listed as a 3 bedroom home and it has 3 bedrooms. It was looked up as being taxed on a 3 bedroom home, too. So, we are now in a what to do with only days away from closing. Obviously, we would have liked everything to be on the up and up and a completely permitted home. However, is it unwise to pursue this at the price we offered before we knew the home did not have all permits? Somehow, shouldn't the listing agent be held liable for baiting us? What can we do besides just let the home go or accept the deal? Can the agreed upon price be lowered because of the neglect to inform beforehand?

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Sandra Carli…, Agent, Newport Beach, CA
Mon Mar 3, 2008
You're right, the listing agent, if he/she knew about the room being unpermitted, should have told you up front. The seller should have disclosed it, if they knew (the work could have been prior to them owning the home and they may never have investigated it) because it could affect the value of the home.

On the other hand, it is the buyers responsibility to go and check whether permits have been pulled or not on the property they are buying. It is part of the buyer's investigation. (A smart listing agent will do this just to prevent this type of problem, and also recommend to the buyer to do the same, in writing, but it isn't necessarily their job to.) In California, buyers are given 17 days to do this unless it is negotiated differently. You also, normally have 5 days to do any investigating on any new disclosures given, even after this 17 day period. Was this new disclosure in writing?

If you feel this lowers the value of the home , the time to renegotiate is now, but it doesn't guarantee they will lower the price.

Should the listing agent be held liable? For what, disclosing the truth that was available publicly and is part of a normal buyer investigation?

I know this might sound harsh, but buyers need to investigate and take their 17 days seriously. A good buyer's agent will explain this to you prior to your home search. Most buyers do not know that looking up permits is part of their job.
Web Reference:  http://www.ocbeachblog.com
2 votes
Patrick Shar…, Agent, Anaheim, CA
Fri Jul 18, 2008
Unpermitted bedrooms and bathrooms are never a good thing. Since you are still in escrow you may want to ask for a price reduction. Although the agent "could" be acting unethically, it is possible the Seller did not inform them of the lack of permits until recently. Here is the question you need to ask yourself before moving forward: if they didn't disclose these items to us, what other things have not been disclosed? Based on that question, with all of the property available on the market today, is this the type of seller you want to deal with?
1 vote
Vicki Moore, Agent, San Carlos, CA
Thu Feb 28, 2008
Have you yourself gone to the county to determine what is permitted? It sounds strange that the county records say 3 bedroom, but the agent is reporting that it's not permitted.

You can certainly try to renegotiate. Talk to your agent about what's standard in your area. It's very typical for properties in my county to have unpermitted work done without affecting the sale/purchase price. Is it required in your county that the seller bring the property up to code before sale? Have you already given notice to your current living situation that you would be moving? We don't know when the agent found out about this issue. If you've used a standard California Association of Realtors contract you'll have more time to figure out what steps are appropriate for you; check your contract to determine how much more time.
1 vote
Sandra Carli…, Agent, Newport Beach, CA
Sat Sep 6, 2008
I'm seconding Jeremy's request... How did this turn out?
Web Reference:  http://www.OCBeachBlog.com
0 votes
Jeremy Lehman, Agent, Garden Grove, CA
Wed Sep 3, 2008
Hi Kim, I am curious to know how this turned out for you. Please let us know what you decided to do.

Jeremy Lehman
Web Reference:  http://www.LehmanHomes.net
0 votes
Access REO S…, , Los Angeles, CA
Thu Feb 28, 2008
If you already bought the home and discovered that there were undisclosed material defects, then you can of course sue the listing agent and the seller for intentional non-disclosure (of course the agent will argue that he had no idea). However, because you haven't bought the home yet, then at this point you can only walk away or ask for a price concession. You can also submit your complaint to the local board of Realtors (assuming the agent is a Realtor) for ethical discipline. I'm on the discipline/grievance board and our job is to make sure these things do not happen.
Web Reference:  http://www.condostorela.com
0 votes
Eve Friske, , Orange County, CA
Thu Feb 28, 2008
Hi Kim,
What I would do is have your agent write up an amendment to your offer at a lower price and present it to the listing agent. This is what it sound like you want to do. Unfortunately, he/she may not have not know about the bedroom not being permitted and disclosed this information to you when they found out.
You really only have two choices at this point if the seller will not accept a lower price. One, to accept the home without permits and close escrow or two, cancel the agreement.
Good Luck with this and keep us all posted on what happens.
0 votes
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