Seller Not Closing Open Permits

Hey Folks, We’ve been in contract on a house since early January. The seller had open permits. When we first went into contract I went to DOB to see the extent of the open permits. I was told that they should be able to close them in a reasonable time. Long story short, many months have passed. Our great interest rate has expired. The seller has not closed the permits. In fact, he had a bad inspection and seems to have quite a bit to take care of. What’s frustrating is that I monitor the progress and they are moving SLOWLY. Clearly they are not rushing to get these closed. I get the impression that they’re waiting us out because the market has improved and they want more money. Has anyone experienced this? What are our options at this point? We are doing a 203K loan so we could take over the permits, but that seems risky and complicated. The permits have been open since 2003 and they are tied to a new CofO. I REALLY don’t want to take on that burden. Please share any advice or similar experiences!

emilyfrances

in Home Buying 11 years and 11 months ago

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sbbk | 10 years and 10 months ago

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Hi emilyfrances I’m interested to hear what you did to move your situation along in the end. I’ve been waiting a year to close and previously was having regular calls directly with the seller who would give me updates but he’s now completely fallen off the face of the planet. Very frustrated. At this point I’m happy to pay for additional actions as we’re now priced out of he neighborhood after a year. Need a pitbull lawyer and expediter! Thank you!

emilyfrances | 11 years and 11 months ago

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We talked about that as an option. We would probably wait to do that until he threatens to cancel the contract. Trying to avoid another expense on this property that we weren’t expecting…..in any case – thanks for your comments!

slopefarm | 11 years and 11 months ago

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EF, yes, so hard to know these things. My point is that if you have a good faith basis to bring a lawsuit that would affect title — such as for specific performance — and that would allow you to file a lis pendens, you would have waaaay more leverage because seller could not sell to anyone else. Check with your lawyer. Not sure a damages suit is worth much.

emilyfrances | 11 years and 11 months ago

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It’s hard to tell. It’s my understanding that the seller is in a healthy financial position, though he is loosing rental income from two of the units (it’s a mixed use townhouse). They’re vacant and our contract does not allow him to fill them. I really don’t want to file a lawsuit, but will if necessary.

slopefarm | 11 years and 11 months ago

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Oh and yes, Scott Schnall. Best strategy is to try to visit him early, like 7:30 am. He talks really fast, like the guy in the early fedex ads.

slopefarm | 11 years and 11 months ago

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I think the key question is how much leverage your contract and your and seller’s situation provides you with. Was closing the permits specified as a condition for closing? Do you have any grounds for asserting that failure to close the permits is a seller default (and if not, your lawyer may have some s’plaining to do)? Do you know if the seller is carrying a mortgage and therefore bearing a cost to delay? If you are in a position to sue (not that you’d want to) for specific performance, then the risk to seller that title will be tied up in litigation will offset the perceived gain from trying to market the house and get a higher price. Talk to your lawyer and figure out the most aggressive strategy that is reasonable and that your contract affords to maximize your leverage here. If there’s a cost to seller’s screwing around, you need to identify it and let him know what it is.

emilyfrances | 11 years and 11 months ago

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Thanks, Dave. We do have an attorney and she’s been in touch with his attorney regularly. Seller said that his expeditor wasn’t getting it done so his architect is taking care of it. But still very little progress. I don’t think that we can close with the open permits and money in escrow. We’re doing a 203K loan so we could renegotiate with the seller and complete the work ourselves. That seemed like a mess I didn’t want to get into…..and I don’t think the seller would renegotiate if he’s trying to get out of the deal. If it’s clear that he’s not acting in good faith, we’re considering filing a lawsuit. Damages being lost opportunity due to increased property values and interest rates. But that’s risky too. This whole process is awful. I would be interested in talking to the expeditor you recommended. I’ll look him up. Thanks for the advice!

daveinbedstuy | 11 years and 11 months ago

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Yes, it is likely that they may be stalling because the price has likely increased. Do you have an attorney? he should be dealing with the seller’s attorney on this. You could close with open permits and hold back a large amount of $$ in escrow until they get closed. If you really want this house, that may be the best option especially since yes, interest rates have risen. Get the advice of an expeditor on closing the permits. Scott Schnall is excellent.