Profile picture for arleea473

Illegal Addition

Hi my husband and I have made an offer on a house that we really love. Well after doing all the paper work and semi close to closing; our inspector informed us he could not find a crawl space for the 'family room' or any way to get in it if there is one. Making us suspect it's an addition.
 
Our agent checked and saw no history of permits and checked with the sellers agents and they said they know nothing of it. Me being skeptical since our agent said it should be 'okay', looking into the county's assessor's site to find out that the square feet is smaller and the layout does not include the family room.

I e-mailed her to see what we should do to to legalize the addition. I also want to know what others think we should do. I know there's the risk of the county having us tear down the addition or paying back taxes. In all honesty I want the sellers to pay for the costs to legalize the additions. Or can they reduce the price for us or is it too late for that? We do love the addition but I don't want to pay more than what we're already paying.

Thank you! 
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May 12 - US
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Answers (9)

Profile picture for arleea473
Apparently the sellers refuse to legalize the addition. So we're backing off. Should we report the un-permitted addition to the city?
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May 20
Profile picture for arleea473
Thank you everyone for your suggestions. Because they don't want to do get the room permitted, we may do a formal letter and if they still refuse we will back out.

I don't want the chance of our home insurance being voided and other problems like back taxes and costs. 
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May 16
Profile picture for stewart c baker
A possible alternative is to have the addition inspected by qualified licensed contractors to see if it was built in a workmanlike fashion, and is functioning properly and safely.

We actually requested this in our "repairs/corrective action" and the seller declined to do it.  I was willing to give them benefit of the doubt, but it is starting to seem like they know it's un-permitted and just don't want to own up or pay for it, since they themselves did not have the addition made.


When we had the home inspected as part of the buying process, our home inspector (who was very thorough) was pleasantly surprised with the quality of the entire house, including the addition, so we're not too worried about it being unworkmanlike or actually dangerous.  I talked with the city, who explained what would be needed to get the addition permitted retroactively, and they mentioned the wall-tearing aspect.  But mostly the tax and insurance and lender stuff is the problem.

Appreciate your thorough responses both here and earlier, Mike and others!
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May 16
I would suggest that you give the sellers a formal request to cure the problem.  Therefore, pay the back taxes and have the addition permitted do that it is a legal addition.  By preparing a written request, it will let them know that you are serious about walking away from this purchase.  You also want to keep in mind that the sellers and their agent will have to disclose to any other potential buyer the lack of permit and the potential consequences.  This may be enough to motivate the seller to do the right thing.   If they still refuse to, they will lose this sale and will have a hard time selling this house to any other person.  Their only options will be to cure the problem or lower their sales price considerably for the next buyer.  Chances are they will just fix it for you.  Also, keep an eye on the timelines stated in the contract for being able to back out and keep your earnest monies.  If you are approaching any timelines, get them extended in writing. 
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May 16
Profile picture for sunnyview
"Seems the sellers will not get the addition permitted."

That is unfortunate, but it is a seller problem. If the house is overpriced without the unpermitted space, then I would make your offer on the value of the house to you without the addition or at least with the added tax amount. I would ask the seller if they are willing to pay for the permit cost at least. If not, you have a tough decision to make.

I would make sure even if you pass to disclose the illegal addition to the agent and to the seller in writing with a copy of the county paperwork. Don't allow the seller or listing agent to "pass the buck" to a buyer who will invest in another home inspection without knowing upfront. Do what you can to put it into the open.
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May 16
Profile picture for arleea473
Seems the sellers will not get the addition permitted. They were willing to fix the majority of the things like the leak in the bathroom, loose toilet, etc. We're seeing with the city how much it would cost in back taxes and it seems about $900 to get the room approved. I really don't want to pay the back taxes and the house is already a bit pricey compared to others in the area.
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May 16
If the family room was done without the proper permits and the home is listed for sale not disclosing this material fact, it would appear to me that you have cause to cancel the purchase agreement.  The giveaway sign of a problem is the county record versus what really exists.

This becomes a seller problem, don't make it your problem. 
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May 13
Profile picture for wetdawgs
I would request that either they pull all permits retroactively  and get them fully closed for the addition, or withdraw your offer.    If back taxes are due, make sure that the sellers get that fully sorted out before closing.

It is likely an appraisal will not count the square footage as it is not permitted, but you also may find that the insurance company will not insure it as it is not permitted. 

This isn't trivial, so work through it carefully. 
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May 12
You can see if your county will allow permits to be pulled but be prepared for them to require you to open up walls so that they can inspect the framing, insulation, plumbing and electrical. They could even require you to completely tear down the addition. Things can get more complicated depending on how the foundation was constructed.

A possible alternative is to have the addition inspected by qualified licensed contractors to see if it was built in a workmanlike fashion, and is functioning properly and safely.

You may or may not run into an issue with your lender. Most appraisers review the county records and will note any discrepancy with what is publicly documented versus what they find during their inspection. The discrepancy may be caught by the lender during their appraisal review. Some lenders will not fund a loan with "unpermitted additions", others may charge a fee or offer an increased interest rate, others may accept an unpermitted addition as long as the appraiser found the addition to have been completed in a workmanlike manner and did not note any health or safety issues.
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May 12
 
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