Is It Permitted?

So much has changed from the old days…meaning the 1998-2007. Everything was OK back then. No matter what problem existed buyer’s pretty much overlooked it. They just wanted a house. It’s a whole different animal in 2011. Case in point: I’ve got 2 new listings coming up that have issues around permits.

In one case, the garage was converted into a family room by a prior owner. Garage conversions are typically frowned upon by local governments who require parking at residences. Also, they’re not too happy about washer/dryers and hot water heaters existing in living areas. This kind of thing happened pretty regularly in years past  and nobody really cared much. Now, FHA won’t allow a conversion like this on loans they’re underwriting. That means anybody who doesn’t have 20% down isn’t going to be able to get a place like that…or the garage is going to have to be brought back to it’s original purpose.

The second case is even more difficult. This one involves a 2500 sq ft 4 bedroom, 2 bathroom house with a family room. The problem here is that the public record shows that the house is a 1000 sq ft, 2 bedroom 1 bath house. When asked, the seller told me that her husband and some of his friends, who were contractors, did these additions in the 70’s. “He didn’t believe in permits” she said. Hmm. If FHA is skittish about a garage conversion, what do you suppose they’re going to think about 1500 sq ft of unpermitted living space? I’m thinking they’ll take a dim view of it. Not to mention the fact that, from a marketing standpoint, the house will need to be marketed as a 2 bedroom house with bonus space since these additions were done with out permits. Doing otherwise could easily lead to a lawsuit. What happens if the person who buys this place decides to remodel a bathroom down the road and tries to get a permit for it? What does a city building inspector say about all this additional square footage?

In this case, I’m thinking the best bet is going to be to try and get the additions permitted. I have no doubt that this will be the topic of a few future blog posts. It’s going to be really interesting.

Comments

  1. It will be interesting to see how a choice made in the 70’s comes back to haunt you 40 years later. The other interesting thing about that home that I’m curious to know is if it has been unassessed for property tax all these years?

    Will the new owner find a surprise increase in the their tax bill next year?

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