Is there a duty to let a buyer know that work done was not permitted?

Asked by onegal, Central Office, Richmond, VA Wed Sep 26, 2007

Does your answer change if I tell you this is my neighbor's house that is for sale? I think most would answer my inital question with an absolute, "ofcourse!" Now if I tell you that it's not my house does that change your answer? What if YOU were the potential buyer?

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Deborah Madey, Agent, Brick, NJ
Wed Sep 26, 2007
BEST ANSWER
If you are a party to the transaction, you have a duty of full disclosure (seller) and due diligence (buyer.)

If you are not a party to the transaction, I caution you to be careful when communicating with a party unless you are 100% sure, and even then, be careful. If there is any chance that you are incorrect, and incorrect information negatively impacts the transaction, you could find yourself more involved than you intended.

If you have a concern about permits, you can refer that to the town for further review. In this way, you have fulfilled a role of good neighbor without risking erroneous info being the source of a problem.
2 votes
Mike Kelly A…, Agent, Santa Rosa, CA
Wed Sep 26, 2007
If you're asking are you under any obligation to tell a prospective buyer of unpermitted work on a neighbor's home--NO. You are under NO legal obligation to be a snitch or a prospective good neigbhor. You may wish to go to your neighbor who is selling the home and say something like, "I just wanted to make sure you are aware you need to disclose the lack of permits on your bedroom addition. Did you tell my prospective new neighbor this? I'd hate to see you close your sale and have them come back and sue you. That would be so messy--don't you agree??"" (big smile here!) Or just call the City/County and rat him out. What the heck--he's moving anyway!! Just remember, this wind can blow both ways!!
2 votes
Sylvia Barry,…, Agent, Marin, CA
Wed Sep 26, 2007
Hi Laura:

Just want to clarify your question - you are asking that if you are the neighbor, and you know your neighbor did work that are not permitted, should you tell the potential buyer you know the seller did not get permit for certain work. Is this the question you are asking?

By the way, in our area, title search will not show the un-permitted work. If you have a 3/2 and added a bedroom without permit, the tax record (which is part of the title search) will only show 3/2. So tax record will reflect things like that. However, for other un-permitted items, such as changing a window, kitchen remodel, the tax record will not show that. A city inspection will verify what has been permitted and what not.

Sylvia
2 votes
Sylvia Barry,…, Agent, Marin, CA
Wed Sep 26, 2007
If I am the seller, I will definitely disclose anything that has material effect on the house.

If I am the buyer, I would love to find out everything about the house, but then that is why it would be my duty to do my due diligence to get all the information about the house even after the neighbor tells me something. How would I know if the neighbor is telling me the truth as this is not their house? I might lose a perfectly great house because I worry about something that has no impact on the house.

If I am your neighbor, I will not go around and tell people that the work was done without permit. I might have heard the seller tell me that, but the seller could have gone in and get the permit afterwards and I could be liable for misrepresentation.

There is just no need to be into other people's business when you are not part of it.

Best,
Sylvia
2 votes
Keith Sorem, Agent, Glendale, CA
Wed Sep 26, 2007
Laura
Real estate law obligates the seller to disclose "material facts" that would affect the buyer's decision to purchase the home...that includes the value of the home.
I am not an attorney. There is no law that YOU, the neighbor need to do anything. However, depending upon the laws of your local area, in principal if the buyer finds out after the purchase that the seller failed to disclose "material facts>, the seller may be liable for damages.

The principle of number of Realtors have posted is that, in general, it is better to disclose an issue than not to disclose it. An example would be of a barking dog next door. If the seller tells his neighbor to keep the dog quiet while his home is on the market, and fails to mention anything to the buyer, the seller could be liable (as a matter of fact, this exact case was cited in the LA TImes and the seller paid BIG TIME). OTOH, if the seller simply disclosed the fact there was a barking dog, there probably would not have been any problem.
1 vote
Ken Pujdak,…, , Greenville, SC
Wed Sep 26, 2007
Definite YES, unless you don't mind being sued later. The county could make you take the structure down.
Web Reference:  http://www.sellmyhomeken.com
1 vote
J R, , New York, NY
Wed Sep 26, 2007
No matter whose house it is, if there are no permits, the buyer must be told. In my area, however, this is something that would come up during the title search, so the buyer and everyone else would know at that point.
1 vote
Ute Ferdig, Agent, Newcastle, CA
Wed Sep 26, 2007
Hi Laura. Yes absolutely, the seller must disclosue all material facts and building without necessary permits is definitely a material fact as it could affect the buyer's decision to buy or not buy. Now, you as the neighbor do not have an obligation to tell the potential buyer anything and I would be careful not to volunteer this informaton unless you are absolutely certain that no permits were pulled. If you tell a potential buyer that permits were not pulled and they pull out of a transaction because of it, you could get in trouble if it turns out that either permits were not even necessary or they were actually obtained.
I understand your last question to mean that you as the neighbor are the buyer. As a buyer you have a duty to conduct due diligence investigation and that duty is totally independent from the seller's duty to disclose. Thus, if you know or have reason to believe that work was done without permits and you buy anyway, you can't later complain because there were no permits. When you assert legal remedies you have to come to court with clean hands. I hope I did not misunderstand your question.
Web Reference:  http://www.go2kw.com
1 vote
Phil, , Guilford, CT
Sun Apr 13, 2008
I think the Property Condition Disclosure has everything required to be disclosed. Beyond that I think most sellers would carry a 'don't ask, dont tell' attitude toward something like that. However, if the seller lied and said it was, when it really wasn't, then that can be a potential problem. But what proof do you really have in court unless this is all written? Either way it is highly recommended the buyer do there own research by checking at town hall if it concerns them. Even if the seller said it was permitted.. why settle for words? if you want to be sure .. you need to look up the records.
0 votes
Tammy LaPlan…, Agent, Norwich, CT
Wed Mar 26, 2008
Your answer simply, you may have a moral obligation to contact the real estate agent listing your neighbors property, but that agent may already know. You see, there is an obligation on the part of the selling agent to advise their client if they are aware, but they are NOT obligated to disclose to the buyer or buyers agent. In fact, they can lose their license if they do. The property owner should have disclosed, but it will come out, probably at the closing. The buying consumer will probably have to pull permits and pay the fines associated depending on what work was done. Electrical and Plumbing, well the town may require walls exposed to insure the work was done to code. Bad situiation for the homeowner and buyer. Ideally the seller should pull the permits and pay the fines themselves prior to a buyer coming across. Hope this helps.

Real Estate Pro
NE Connecticut
0 votes
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