Profile picture for user0580026

About to go to contract--some major concerns

So, my husband and I just had an inspection completed on a property that we absolutely fell in love with. It was love at first site. a cul-de-sac home that is rare in the area that is totally in our price range.  Anyway, the inspection revealed some things that are concerning us, and my buyer's agent and attorney don't seem to think they are a big deal. The major two things are that the house is oil heated and uses an underground oil tank to supply the oil. The owners didn't mention this the first time we went to the house and they showed us the heating system, but we should've picked up on it. We are just kind of new at this.  We are concerned about this underground tank. Sounds like it could be a big headache if it turns out there is a leak, etc...
The other issue is that I went to city town hall in an attempt to do my due diligence and found out that the house is missing proper C.O.s and permits.  There is a beautifully finished basement in the home but no C.O. for it (the current owners finished it). There is also a second floor bathroom addition (doggie dormer) that the current owners did not add but there is no C.O. on file for it. My agent said, and I quote "these missing c.os dont have to be a big deal unless you make them one." My concern is that when we go to make changes to the home, which we plan to do, an inspector from the town is going to come in, see the finished basement, and the doggie dormer, make us get the proper permits, possibly even demolish that bathroom, which looks like it was constructed in the 70s or 80s, and maybe fine us.
Sorry for the long post--but basically i'm wondering what our next course of action should be. I'm really conflicted about what we should do and any insights or advice would be greatly appreciated! Thanks so much.
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July 05 2012 - New York
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Profile picture for user0580026
I will keep you all posted. We are waiting to hear back from the seller!
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July 08 2012
Not ignoring or dismissing theunder ground tank issue. That does sound important. We just don't have those here so i have nothing to offer that. Let us know what you do.
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July 07 2012
I think the underground oil tank is the greater issue of the 2 you've mentioned. Should a leak develop and soil contaminated, it can be extremely costly and problematic. The EPA would need to consulted as well as local professionals.
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July 07 2012
sorry i was posting by phone and that is all i could type.  In the situation I knew about, it was not known before closing that there was unpermitted work.  The buyer's were all moved in and the city was doing an audit of their own records and discovered it, they made the people move out, until they could get inspections done, the could have forced demolition but did not.  In that situation both agents were shocked and would ahve given similar advice that it was no big deal.   Luckily for the buyer, they had some extra title insurance policy that acutally covered unpermitted work because it wasn't caught at closing.  In your case you know about it ahead of time.  the only peron that can officially tell you it's no big deal- is the city person that says that after they sign off on it.

So you'll want to either make it a condition of the contract that the seller resolves those issues or you'll want to get with the city to get them resolved yourself in advance of closing.
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July 07 2012
I have seen a city deny occupancy of a home about a month after closing on it. Home was 20 years old and there was an add on that was never "permitted" the add on was about 5 years old. The new buyers were stuck in a hotel for a week at the mercy of the city. So....it does matter. Get thru city involved.
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July 07 2012
If your home passes inspection the permitting process is basically irrelevant.

Wrong. Home inspectors don't do intrusive testing. They don't remove sheetrock to determine if electrical and plumbing has been properly done. They don't check city records to determine if work was done with permits. Their only clue is if they can visibly see that work was improperly done, which means it was not inspected after completion.

If it's determined that work was done without a permit, or if variances were not granted for work that was done (additions, etc) the city can force the new homeowner to open up walls for inspection and demolish structures that did not have permits pulled or variances requested. It's been done in my city so I know it's true.
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July 07 2012
Profile picture for sunnyview
"@sunnyview is incorrect.  Your real estate agent is correct. If your home passes inspection the permitting process is basically irrelevant.  At worst, you may not be able to use the non-permitted area as square footage in an appraisal for your mortgage.  "Non-conforming" areas of the home may not be valued the same as the rest of the home."

Sorry no. The agent is incorrect, but the good news is that other than that we agree. As you say yourself, that square footage cannot be used in a appraisal and/or will not be valued the same as a permitted square footage. That is a big deal. 

You did fail to add that if the addition gets red tagged by the building department, the cost of bringing it up to code or removing it would fall to the new owner. If that happens, that is also a big deal and can be quite expensive.

"Bonus" or unpermitted square footage is worth less than permitted area and buyers should not pay permitted rate for it without understanding the potential difference in value upfront. The same can be said for above ve below grade sq footage.
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July 07 2012
Profile picture for SoCal_Engr
You might want to give Post #14 on this discussion forum a quick look. The whole thread is interesting back-and-forth, but the bottom line is that there's a reason for permits - beyond the government getting theirs.
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July 07 2012
Profile picture for wetdawgs
A good home inspector will let you know that they are not a substitute for inspectors that come out from the permit process.   There are a lot of inspections that occur during permitted construction before walls are closed up and cupboards installed.

You are absolutely right to get the sellers to file for permits etc. 
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July 07 2012
Typically permits for work done after the fact are double and are the responsibility of the Homeowner at the time the violation is discovered. If the 2nd bathroom and basement are not legal, then you shouldn't be paying for them.  The should get the proper permits or reduce the price.

As far as the tank is concerned, insist that the seller get this properly abandoned or removed.  My company charges $2175 to abandon and replace with an above ground tank.  That should give you a ball park figure.

Do not rely on testing, pressure testing can cause a weak area to break open and start a leak.
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July 06 2012
Profile picture for user0580026
Thank you so much for the responses. We are going to ask the sellers to file for the permits and see if they would be willing to abandon or remove the tank. Wishfult hinking on our part but let's see what happens! Thanks again.
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July 06 2012
Profile picture for sunnyview
I think that your agent is wrong. A CO or lack of permits for major updates can be a big deal and can bite you when you go to sell. Think about how much you would have offered on this house if you knew upfront that no permits were pulled for those updates.

When buyers come through they assume that what they see is legal. Some will not care that it is not, but if they find out when you go to sell they may not be willing to pay the legal rate for that "bonus" space. I would call the local township/city and ask how this situation would be handled by them if you do further work to the house.

Do not accept your agents pat "don't worry about it" answer unless they are willing to pay for the existing work to be permitted if it gets red tagged by the inspector.

Tanks are common and should be inspected for leaks. they last a long time, but do sometimes have to be emptied and filled. It is a somewhat common repair. You can get ballpark estimates for it if you are concerned that it will be an issue, but I would not worry too much about it unless you see current trouble or the underground tank will be hard to access if you need to fill it in.
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July 05 2012
If you plan to resell this house down the road those permits can really be a big deal, and also with the inspector it he could make a fuss over it., You could tell the sellers that you want them to file for the permits and let them straighten it out now, so you don't have a headache later.
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July 05 2012
 
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