No Building Permits....Help!

[Dee Dee]

Hey you guys...I need some input here. :?
My neighbor is in deep trouble, behind on her mortgage, getting a divorce and wants to sell me her house quick. The home is entirely in her name...she just wants to bail before her credit is hashed by going into foreclosure.
Here's the catch. She and her husband built an addition onto the cabin that is about 600 SF (300 ft. on main level and 300 ft. on second floor above it), and never bothered getting any building permits. The upstairs level is nearly completed...everything but the floor covering. The lower level doesn't have the drywall in but is insulated and the electrical wiring is exposed and can be seen enough to inspect, at least at on that level. My brother who is an experienced framer is going to come today and have a good look at the house to see if there are any blatant building code violations that he can find as far as structural engineering. I would consider calling the county to inspect it, but that could potentially throw out red flags and stall the deal. My plan is to close on the sale after I am fairly confident that all major structural concerns have been addressed, then call the county to inspect, bring up to code if need be, and get it all legal. The reason that I'm not calling the county before the sale is that I'd like to close this deal before it goes into foreclosure (this county is notoriously slow at inspections), and the current homeowner is flat broke and up to her eyebrows in debt...she would probably be fined and wouldn't be able to do anything about it.
As far as I can see everything looks up to code, but of course I'm not an inspector. The homeowner's husband was a contractor, so he is familiar with codes in the area....just didn't bother with the permits.
I know it's a risk on my part if I do this as the county could be a pain, but the price she is asking is well enough below market value that I think it would be worth it (unless, of course, they tell me to tear the whole thing down).
Here's the deal...if the county goes easy on me and I drop about $15,000-$20,000 to finish and remodel the house, I believe I could easily sell it for at least $50,000 over my investment by spring, or rent it out for close to my mortgage payment. If I don't jump on it now, it'll go into foreclosure, the owner will have her credit completely totalled, and she'll lose what equity she has and needs to catch up on her debts to get a new start. She's begging me to come through for her. She knows that if she tries to list it with a realtor the building permit issue will be a big one for any potential buyers, and she doesn't want the hassles. She's in over her head and the clock is ticking.
Without seeing the property yourselves I know you folks can't make a perfect judgement call, but any input, experience or advice would be appreciated.

 

[Jeff Horton]

Only one bit of advice Dee Dee. Keep you emotions in check!!!!!! Be sure her pleading is not influencing your choice. Its easy to get caught up wanting to help her and convincing yourself you can make money. I have built an remodled and it is always more work and money than you think.

Sounds like you have a chance to make some money. But I have no idea how much hassle you will have because of the permits. I would try to learn as much as possible about what they have done in the past with cases like this before you jump in and loose your investment.

Just take your time and make sure your investment is an investment!!

 

[Dee Dee]

I know what you're saying about keeping my emotions in check...no problem there. The homeowner and I are not very close at all. Believe me when I say that self-preservation ranks well above bailing someone out who got in over their head after a long history of making bad choices.
:roll:
The value of the land alone is close to what she's asking. It's 5 acres, zoned for horses and has continental divide views. The house is around 1500-1600 SF with the addition. I think that if I had to tear the entire addition off I could still recoup my investment and around $20,000. But that would be quite a bit of work for not as great a return compared to keeping the entire dwelling and finishing it.
And I am a workhorse with friends that owe favors in various building trades. I'll bet that most of them would glady pitch in for nothing if I told them they could come up from Denver for a weekend, bring their family, stay in a cute log cabin and hang out (hot tub included).
I can lay tile like a pro, on floors, countertops and in bath areas. I have worked with most power tools. I have hung sheet rock (with a little help) and like to paint. The biggest benefit is that the place is right next door to me, and we're the only homes on this private road.
Beyond stressing about the addition being up to code, what worries me more is that if she loses the place I might end up with poopie new neighbors. Where I live that can be a real hassle...no covenants and the Beverly Hillbillies could take over.

 

[airphoto]

D.Dee,

Why alert the locals? If it looks okay, purchase it .. then put in for a permit to do what's already been done. Obviously the municipality has no idea that anything's been started. Certainly you'd not tell them!
Give 'em a couple of months after getting the permit and call for an inspection ..

 

[Will Granger]

Deed ee,
No permits are required where I live if the addition is less than $5,000 and no plumbing is involved. First see what permits are needed for a partial finish. Could be it's legal or not up to a level that requires a permit. Permit are harder to catch than Bonefish on a fly rod. 8)

 

[Ruth Langkawel]

The worst that I have seen happen over lack of permits for additions was a fine of $6,000 plus permit fees and the inspectors got really picky.

That was when the permit situation was discovered by the Buyer prior to close, and insisted that the seller correct the situation before close.

 

[airphoto]

D. Dee,

In addition to my post, above, why doesn't your neighbor hustle right down to village hall on Monday morning and purchase a building permit?

 

[xmrdfghap]

Dee Dee, how old are the improvements? Were they there before you moved in or were they added while you watched?

My initial thought is that once you possess the home, you can justifiably claim that you thought it was a legal addition. If the former owners, current presence unknown, did anything to violate the law, you were certainly unaware of it. And, while you are an appraiser and had done significant research into the market value of the property you did not go into title and legals on it as the title insurance company and appraiser of record wold have done that.

At that point, if they insist on bringing it to code, you might have to hire an inspection done, or have a plumber and/or electrician come out and inspect, correct, and pull the proper permits. Even the studs can be located and inspected through the walls. The only portion of the home that can not be easily inspected and that may have to be inspected, would be the footing. At that point an engineer should be able to provide some type of certification after testing.....but it may be costly....although far less costly than removing the addition.

The county/city wants their tax money. They also want to make sure the property is not a health or fire hazard. While they could, possibly, make you take it down, probably the most they will do is have you pay for the permit, have it inspected to verify it meets code, and increase your taxes........this is, of course, contingent on you going to them and telling them everything you know.

If it were me, I would buy the home and wait for them to tell me that something is wrong. At that point, be willing fix it.

 

[Dee Dee]

To everyone...
The addition was added this past summer, so it's new.
The entire home is on concrete slab, including the addition's new slab. Will check the thickness tomorrow with brother to see if it's to code
I'll be re-running the plumbing to move the kitchen into it and improve the layout. Should be easy for inspector to see since there is no sheetrock yet.
Seller can't go apply for inspection or get permits because she is flat broke. I mean penniless. She's borrowing money from friends to buy food...bad situation.
I don't want to ignore the lack of permits because if I sell the place it will be quite obvious (county records of square footage vs. actual SF) that an addition has been added. Don't want the buyers to have anything to wave under my nose like Ruth mentioned. Better to nip it in the bud, so to speak.
I'm feeling more confident after reading all of your replies...not one of you has said that it could be a huge problem, and since I think it's a quality build I don't think the county people will be too rough on me.
Whew!!! Thanks!

 

[Walt Kazmierczak]

Dee Dee,
You brought up two positive points I believe are in you favor. 1) Your brother is an experienced framer, and 2) her husband is a Contractor. My thoughts are your brother should be very capable of identifying & correcting potential inspection problems with framing. In most counties Contractors are well known by the permit and inspection departments (some are drinking buddys), depending on the current personal relationships he may be willing to interceed on your behalf. I am (assuming, I know a bad word) he was involved in the construction. Good luck.
Walt