What happens if a house is remodeled and sold without all permits cleared?

Asked by Jerry Mc Ghee, Los Angeles, CA Mon Mar 4, 2013

Does that affect the ability to close escrow? Does the seller still have liability after the close?

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carlos parra…, Other Pro, Monrovia, CA
Tue Mar 5, 2013
It does not affect escrow. The Seller does not have the liability after close unless it is written in the purchase contract.
If you are buying and someone performed work before you purchased it, I strongly suggest you get those permits final-ed. Otherwise, when you go to sell, those permits will still be open, you will then have to pay for new permits and inspections. You may also have to pay to do work like demolition and re-construction to prove that the work was done correctly. Codes can even change in time and you may be required to even upgrade to newer codes.
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Zack King, Agent, Calabasas, CA
Mon Mar 4, 2013
It really depends on what type of remodel and permits we are talking about. If all the work is completed it could be as easy as calling the inspector out for final inspection relatively easy but still something you would want to have taken care of before escrow closes. As far as liability it would depend on if and when the facts were disclosed. Whatever the case it may not affect the ability to close escrow but it is certainly something you would want taken care off before escrow closes.

Zack King
Keller Williams Estates Calabasas
(818) 825-7388
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John Arendsen, Agent, Leucadia, CA
Mon Mar 4, 2013
So are we talking about un permitted work or open permits that need final inspection and sign off?
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Kawain Payne, Agent, Seal Beach, CA
Mon Mar 4, 2013
Hello Jerry,

Unpermitted homes have many issues:

1. Local City laws-Some cities will simply require the new owner to pay to have the work brought up to code.Others may demand the unpermitted work to be removed. Some will try and prevent the escorw from closing if unpermitted work is not removed or brought up to code.

2. Financing issues-With FHA financing you could run into a problem getting the loan funded, especially if the work was done in a manner that present s and health or safety issue.
On a convention loan, you may be able to get funding, but NO VALUE will be added to the unpermitted work.

3. Personal headaches-I advise my buyers to avoid buying a home with unpermitted work. There are too many unknowns. Worst of all, if you discover issues you will more than likely be struck since you bought the home knowing the work was unpermitted.

4. Safety- Unpermitted work is often done by unlicensed contractors or a handyman.

5. Risk of loosing money- A home is too big of an investment...why take a gamble?

Best of luck to you
Kawain Payne, Realtor
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Dorene Slavi…, Agent, Torrance, CA
Mon Mar 4, 2013
The permits have time frame for being taken care of . The new owners may be able to extend the permits by talking to the city and then, getting a sign off on final inspection
Hopefully the work was done to code so there are no issues to correct. If not, the new owners will have to complete the work and have the permits cleared by the city.
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Laura Coffey, Agent, Santa Clarita, CA
Mon Mar 4, 2013
That is really a loaded question. I would have to see how the contracts transpired. Seller's sell houses all the time without the right permits. If they disclose and you accept they are not responsible. I would talk to your broker or seek legal advice. If it bothers you I would not buy it.
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John Arendsen, Agent, Leucadia, CA
Mon Mar 4, 2013
Permits will stay opened until they've had a final inspection. They can expire and you would have to pay for new ones. Best to deal with it ASAP.
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Ron Thomas, Agent, Fresno, CA
Mon Mar 4, 2013
Normally, I would suggest that this is a question for your Broker.....
How about call the CAR phone number for Legal Assistance.
I would want to know if this was disclosed? Is it PENDING?
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