Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Hi there. I am in escrow on a cheapo place in Sac, CA. It is a bank foreclosure. Bank did not reveal discrepancy in square footage and I just found out today (after pushing my realtor) that there probably isn't a permit for all the square footage. MLS lists 675 sq. ft., agent says permit exists for 50 sq. ft. addition. Looks like an extra 200 sq. ft. exists in the house. It is listed as a 2/1, but there are three bedrooms (believe it was a carport converted to 3rd bedroom) and a dining room that probably wasn't there before (two extra rooms). Both rooms are approximately 10x10. I am paying cash and bank is paying for title insurance, but they have alot of disclaimers in the contract and I am getting concerned. The additions look like they are a few years old and a bank did loan on the property in the past (just foreclosed 4 months ago). My concerns include city wanting permit fees/tear down, extra taxes, and not being able to get a loan in the future if I need. I thought they were required to disclose, but I am reading in an addendum I signed that they are excluding themselves from having to reveal something like this (additions w/o permits) if it happened (which they obviously know it has). So what is the deal here? I am starting to think I am being fooled here and I just can't put my finger on it. Any answers for me? TIA.
Check the code enforcement file at the town clerks office and ask to speak to a code officer about the property. That's exactly what I did with the house I am buying. Don't rely on your agent or anything else.
Buying an REO is not like buying from a regular seller. That bank addendum that they make you sign releases them from any and all obligations. You will not be able to sue them if there are any problems with the house. At least every bank addendum I have seen releases the bank from any liability regarding the property.
I don't know why you think the bank knows about the square footage difference. They only know what an agent tells them. If the agent didn't disclose the square footage discrepancy, that is more of a problem than the bank. They are required to disclosure all material defects. The bank would have no way of knowing whether or not permits were done. Shoot, many sellers don't know that their additions aren't permitted. I have a listing like that now, and she only bought it two years ago.
Yes, you could be required to rip down the addition as it may not meet codes or setbacks. If you get the additions permitted you will have to pay for them, and that will do to the tax assessor and raise your taxes.
The bank isn't going to get those permits for you, so I would call the building permits folks and find out what the costs are for the permits. I would also ask what the lot line setbacks are, and take a measurement. The only time I have heard about tearing down an addition is when they don't meet the setback requirements, otherwise people pay the permit fees and they city inspectors come out and inspect and final the project.
Buying an REO is not like buying from a regular seller. That bank addendum that they make you sign releases them from any and all obligations. You will not be able to sue them if there are any problems with the house. At least every bank addendum I have seen releases the bank from any liability regarding the property.
Yes, I noticed how insistent they were on releasing themselves from liability and that is what made me extra-cautious.
Quote:
Originally Posted by Silverfall
I don't know why you think the bank knows about the square footage difference. They only know what an agent tells them. If the agent didn't disclose the square footage discrepancy, that is more of a problem than the bank. They are required to disclosure all material defects. The bank would have no way of knowing whether or not permits were done. Shoot, many sellers don't know that their additions aren't permitted. I have a listing like that now, and she only bought it two years ago.
The bank had to have known about the illegal additions, because a simple search at the county tax assessor's website, which I checked last night after I began to suspect there were no permits, shows that the dining room and the third bedroom are illegal. Any reasonable person would suspect this because the square footage listed on the assessor's records is simply too small for this house, which is about 800 square ft. Any competent lender would have known this. There is no plausible denial by any parties involved - even I should have suspect earlier, but I am a novice. If I caught on, anyone else should have - I am not Einstein (neither am I a fool).
Quote:
Originally Posted by Silverfall
Yes, you could be required to rip down the addition as it may not meet codes or setbacks. If you get the additions permitted you will have to pay for them, and that will do to the tax assessor and raise your taxes.
In CA, property taxes are based on sale price, wouldn't it be wiser to have the additions factored in now and included in the tax base/sale price now, rather than have them come back and increase my taxes later if they find out?
Quote:
Originally Posted by Silverfall
The bank isn't going to get those permits for you, so I would call the building permits folks and find out what the costs are for the permits. I would also ask what the lot line setbacks are, and take a measurement. The only time I have heard about tearing down an addition is when they don't meet the setback requirements, otherwise people pay the permit fees and they city inspectors come out and inspect and final the project.
Good advice and one that my contractor friend also mentioned. I am going to go down to the county building dept. tomorrow and see what it will cost to get the additions signed off and legal. Thanks for your input.
I'm looking at a bank owned foreclosure with an unpermitted addition. The property has 3 free structures on a 7,800 sq ft lot, but the city guidelines states a property may have 1 free structure per 3,000 sq ft. If I bought the property I would connect two structures together with a hallway/laundry room, but the selling agent is telling me that a bank will not give me a loan on a property that needs corrections. He says we either need to pay in all cash, bring the property to code before we purchase, or possibly place the estimating cost for corrections into an escrow account which will go towards the house after we take ownership. Does that sound right?
In the end, we may just take a pass. We're offering the price which the bank foreclosed at, but I have a feeling investors will pounce on this one since it's listed about 40% below comps and is setup for rental income. Should I make one last attempt at this property and see if a city inspector will advise on what will be necessary to get it legal? Thoughts?
...but the selling agent is telling me that a bank will not give me a loan on a property that needs corrections. He says we either need to pay in all cash, bring the property to code before we purchase, or possibly place the estimating cost for corrections into an escrow account which will go towards the house after we take ownership. Does that sound right?...
If the lender is aware of the issues they may require them to be corrected before agreeing to a loan. It all depends on the lender and their policies and how thorough they are in checking on such conditions.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
