Buying a townhouse with no permits
We have been negotiating on a townhouse and just found out none of the work have any permits. I keep seeing this issue! The work that has been done is facade repair, roofing, new electrical boxes and some wiring, updated bathroom. How would you negotiate this with the seller? What is the DOB gong to think when I file permits for other work and then they come by to inspect and see a bunch of un permitted stuff? I want to ensure I cover myself for extra expenses related to this down the line. Thank you!
dmdesmond
in Dept. of Buildings (DOB) 9 years and 5 months ago
18
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18 replies
cate | 9 years and 5 months ago
As CMU says, most of these improvements do not sound like they need permits in the first place. Electrical does require a permit, and a licensed electrician. While the building department probably won’t care, your insurance company might, if you ever have to file a claim.
carolina-moscoso | 9 years and 5 months ago
Be more concerned that the work was done properly, not whether permits were obtained. BUT, if the property is landmarked, then the the facade work could be a very costly issue in the future. If not, then I wouldn’t sweat it. We’ve backed out of offers because the inspection yielded terrible craftsmanship or structural issues, but never because of permitting issues. As others have alluded to, the odds of finding any property in the city with proper permitting for all renos is slim to none.
hooky | 9 years and 5 months ago
FWIW, I got a 20k credit at my closing for an outstanding plumbing permit. I never fixed the issue, been there 10 years. Maybe I should, maybe I’m not a shining example of what Should be done… but in all honesty it hasn’t affected the enjoyment of my home in the least. Maybe when I sell I’ll fix it… Or maybe I’ll just pass the rebate on.
bklyngirl | 9 years and 5 months ago
I would suggest you tackle the major items that would prevent a sale from going through. Is there a legal C of O on the property or does it have a C of O at all. If the home is being used as a 3 family but the C of O lists it as a one family then your sale runs the risk of being dead on the bank side. The next thing is to determine if the house falls inside of a Historic District? If it does and then work has been done without getting the proper permits you will be dealing with years of trying to abate the work according to how the NYC Landmarks Commish wants it done. If you have (say) water damage in the house from a bad leak but the seller is insisting that the roof is new, then ask to see the paperwork showing when the roof was done and then you can start ticking off $$ for all the water damage inside the structure. The seller may very well have patched the roof but then there are 5 other layers of roof under the new patch and in the end you will have to end up ripping it all out, putting in a new (plywood) base and putting in a fresh roof. Then go to the basement with your “licensed” plumber and have them go over the entire house to ensure all the connections, furnace, water heater(s) gas lines, etc are up to code. If not you can negotiate some with the seller. You should do the same with an electrician. It is best to find a really good home inspector who will crawl all over that place (inside and out) and who will then give you a comprehensive written report you can share with the seller to work on a price downgrade. However if a seller is telling you the sale is “as is” then that is a decision you will need to make with your family but consider that the bank may not move forward to close unless significant issues that pose a threat to their investment are resolved. Good luck to you.
iliad-force | 9 years and 5 months ago
Definitely find a good home inspector and get as many facts on the condition of the house based on the inspection. If you plan on putting some work into the house yourself, realize that you will be inheriting any illegal work that’s been done and the issues that come along with it (e.g. paying potential fines, long delays with the permitting process, and so forth). Once you’ve gotten that inspection report done and have some concrete information to work with, you can present your research and determine what the right recourse might be (and how to balance that against getting the deal done). In some cases it might be asking for a flat dollar amount credited toward the purchase price to cover likely fees/fines associated with known issues. It could be negotiating and asking the seller’s lawyer to hold a certain reasonable amount in escrow for 1 year, only to be used by the buyer in the event that fines related to the unpermitted work are incurred. Whether you want to propose solutions like this at all will depend on what kinds of risks you might be inheriting, how big those risks are, how comfortable you are with some of those unknown costs/issues that will arise, and your own sense of where the current negotiations are. At the end of the day, if you feel the purchase price is fair for an as-is condition home, your goal should be to make sure the condition isn’t drastically worse than it appears on the surface, cost out how much time/money you’ll need to put into the home to get things done right, and expect that the home’s lack of proper permits will become your problem, though not an insurmountable one.
pigthree | 9 years and 5 months ago
there are many experienced buyers out there that probably know more than the average inspector in this town. lots of buyers don’t bother with an official inspection. while all these responses were being typed, an all cash buyer closed the deal 😉
cmu | 9 years and 5 months ago
Nobody gets a permit for roof re-dos or facade unless there’s structural work, do they? And the scope of work OP describes seems small potatoes, not sure why he’s sweating it. Electrical boxes may be the only issue, but you know, fixing electrical is not rocket science. If he had to do future work, none of these should even be an issue…for that matter, if seller hadn’t disclosed, how would he have known some of these things?
chjuran | 9 years and 5 months ago
Seconded, Bob! To address the issue of how to negotiate with sellers, asking for an inspection would be par-for-the-course in a normal sale, in this market. (Normal means not a bank-owned or auction or other weird circumstances. ‘Normal’ sounds like the case here.) If seller pushes back on the inspection contingency, or insists on ‘as-is’ language, that is a red flag. If everything is otherwise green-lit, you would not want, however, to be uncompromising in the negotiations. You MUST not jeopardize getting to contract and a speedy closing. Those difficult hurdles are (likely) more important than winning financial concessions for future work. Future work is likely unavoidable in any case, for instance on the prior unpermitted roof. Lifespan is what, 10 years, for a roof. Future permitted work can remedy what is out of code, if such exists…. Moreover, and I will defer to others with more experience, I don’t think DOB goes on fishing expeditions for random unpermitted work on your premises if you are doing unrelated, permitted work elsewhere. (Barring a complaint or egregious finding)…
BobMarvin | 9 years and 5 months ago
Contacting the “local building department” seems reasonable and might well work in many areas, but “johnnio” who suggests this seems to work in NJ. I wonder if asking the NYC DOB for help is actually advisable, given their terrible reputation?
germaineson73 | 9 years and 5 months ago
I recommend that you consult the local building department and ask them what they advise you to do. You may want to hire a home inspection. You may negotiate a deal with the seller. It really depends on the building official. Be ready to explain what you plan on doing and how you feel it may compete with prior work. Once you purchase the home, you own the headaches as well. Your homeowners insurance may also be at risk. Ask the questions before any negotiations take place. Remember that the 2 entities that will grind you into pulp is the building department and your insurance company.
Lurker | 9 years and 5 months ago
I think this is a pretty common quandary with no perfect answer. Lots, possibly even most homes have unpermitted work. If you file in the future, it’s possible even likely that some of that existing work might come under scrutiny and trigger an issue, depending on what you do and what exists. Might, or might not. But if there’s n issue, the DOB doesn’t grandfather changes with new owners, so you might be on the hook to file and/or correct issues. That’s the big risk–the price ought to reflect that. The more immediate issue is that without proof, everything behind those closed walls is a complete mystery to you. The plumbing in the walls, the substrate under the tiles, the electric running everywhere that may or may not be properly grounded or the right gauge or whatever. That issue is common to any house, but you know for sure things were done in this place, so it’s a little more of an issue. I think you do a cost-benefit analysis and then determine your capacity for risk. Maybe hit up the seller for a notarized statement of the work done and the methods used?
kassie319 | 9 years and 5 months ago
Do you need permits for roofing or facade work? I had an inspector for a house recently purchased – He pointed out some obvious exposed electrical issues along with some other visable problems. What he couldn’t do is give me a heads up on what plumbers have been doing to floor framing for years – 8″x4″ trimmers cut to 1″ for sink traps for example. On your walk through, have a good bounce around the bathrooms to see if there’s any give!
slopefarm | 9 years and 5 months ago
Of COURSE, get an inspection, and do it before you sign the contract. (You do a walk through two days before closing to make sure conditions are not worse than when you signed, but that is different.) However, the inspector will tell you what looks good, needs fixing, etc based on what is visible. Inspector is not going to get into which work was done when and with or without a permit, and which could run you into problems down the line etc. Perhaps more detail is in order. Are you saying this work was done recently by the seller, or over decades by various owners?
dorkofwindsor | 9 years and 5 months ago
Who doesn’t get an inspection? I’d only buy a crackhouse shell if that was the case.
soundhoner | 9 years and 5 months ago
Your inspector might be able to lend insight there. You may not (probably not) be able to get an inspection contingency in your contract, but you can definitely get an inspector at your expense before signing the deal, to alert you to any red flags. You might also use the inspection report as something solid to present items from to get the sales price down.
dmdesmond | 9 years and 5 months ago
Good points you guys. I am sure, especially when you have a townhouse instead of an apartment, many people just skip permitting. The seller is pretty reasonable and I don’t think will mind giving me a price break if the amount was legitimate. I am just concerned about fines and or inspections which require me to rip walls open so they can look at the pipes. Thank you for your thoughts! Sometimes when you are buying you get too emotional to see things clearly and an outside view really helps.
soundhoner | 9 years and 5 months ago
How would the DOB know whether the unpermitted work was done last year, or 10 years ago? It feels like the vast majority of BK townhouses face this problem in one form or another. It’s kind of hard to avoid. Especially in areas that weren’t particularly salubrious years ago, when the neighborhoods were blighted. Permits and inspections cost money, as do architects, etc. etc. I had a few items added to my sales contract related to ripping out some of the most obvious illegalities in my home purchase, that we pushed the seller to do. Beyond that, everyone knew the seller wasn’t going to file any new permits or do anything that took much time or money Depending on what your sales contract looks like, once you’re in contract you have some leverage. If you’re still in the negotiation phase, remember it’s still a seller’s market. The bank might not give you the loan if the appraiser discovers anything totally obvious that is illegal (but they won’t look at permits). The bank might not like it if there are violations on record. In my opinion, the attorney advice is right but I wouldn’t get your hopes up that you can find a 100% legal refurb that easily in BK.
anotherposter | 9 years and 5 months ago
This seems like a time when having an experienced real estate attorney as your buyer’s attorney is very important. He or she should have suggestions on how to deal with this.