Potentially unpermitted rooms with FHA 203K loan and FNMA Seller (contingency, disclosures)
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I finally found a house I love and would like to make an offer. The biggest problem is a carport conversion into a room, a probable room and bathroom addition. All spaces (except the added bathroom) show on the county appraiser's site and are included in the sf and layout. The room addition shows as "enclosed porch-finished" and the carport conversion as "base semi-finished". No mention of the added bathroom (was part of a utility room).
The seller is Fannie Mae, so no seller disclosures. I called FHA, and they told me they could not find any reference to unpermitted spaces in the HUD handbooks. Online research found comments on various sites that FHA does not care about permitted or not, just that they pass FHA standards. My realtor and one potential lender say I will 'for sure' be made to tear down the conversion and addition and they (1/2 the sf of the house) will be deducted from the appraisal, which would then not be sufficient for my loan. First of all, I could not tear down anything without first owning it! I suppose the work could be included in the rehab costs with a 203K, but first I'd need a viable appraisal.
I will call the county tomorrow to verify the lack of permits. The house is in Pinellas County, unincorporated (not in a municipality?). But won't providing them with the address open the can of worms maybe unnecessarily?
Who is it that would prevent me from selling it with the possibly unpermitted rooms? The future buyer's lender?
I'm sure I'll be advised to just let it go. So, give it to me, but I've already heard that. I feel like a dog with a bone though. I've been searching to buy a home here for 6 months and can't seem to find one in my price range that will work out. I can see myself living in this one, which is a big part of the battle, so I'd really like to make sure there might not be a way to make it work.
Hopefully someone out here will have experienced the problem or be able to advise me of where to find valid answers. I'm hoping you'll reach out and help! Thanks in advance.
I will call the county tomorrow to verify the lack of permits. The house is in Pinellas County, unincorporated (not in a municipality?). But won't providing them with the address open the can of worms maybe unnecessarily?
Well, without an address, they obviously cant check the permits. The simpler solution would be to ask for the entire file on the property, then look through it yourself for the permits your looking for.
A Real Estate Agent told me that some towns are not as picky about things like that, especially unincorporated areas, but you should check. It also depends on the part of the country. In the northeast in a densely populated area it's a nono, in some more rural areas they may let it slide with you just paying permit fees.
A Real Estate Agent told me that some towns are not as picky about things like that, especially unincorporated areas, but you should check. It also depends on the part of the country. In the northeast in a densely populated area it's a nono, in some more rural areas they may let it slide with you just paying permit fees.
I know some jurisdictions that will literally come out to your equipment shed and demand proof that you used the right kind of bolts to secure the walls to the perimeter footings. This is county zoned rural property and the equipment shed in question is the kind thing that people build in suburbs for their lawn mowers all the time.
OTOH I know towns where the homes are all lined up shoulder-to-shoulder for miles and unless somebody specifically calls the authorities to get work stopped it is not uncommon for "homeowners" to "modify" the interior down to the studs including plumbing and electric without any inspections or permits...
My point is that the OP probably needs not just the OFFICIAL stance of the county in question but also some sense of the LOCAL CUSTOMS and if the real estate agent is not 100% sure that the county will DEMAND removal of the off-permit work it is irresponsible to make any comment one way or the other. Nearly all jurisdictions have some kind of "hardship provisions" and if the seller is a lender they certainly cannot be held liable. If the county officials have legitimate life-safety concerns of this structure being built without adequate oversight of electrical / plumbing / structural it is often possible to get inspections AFTER THE FACT to confirm everything is OK or spell out what changes are needed. It is possible to even ask for any fines or permit penalty to be waived in such a case because the alternative is likely that the house will continue to sit unoccupied and deteriorate.
Sometimes you need to get a little creative -- if there are specific County Supervisors or similar elected officials that represent this area give them a call in their office or when they have a legislative meeting. Ask them to address these issues through legislative means. If they don't want to leave folks stuck in "limbo" with houses that maybe need upgrades but maybe are OK make is EASY for the buyers to get things compliant without being penalized...
Well, 203k requires plans to be approved prior to close, so I would add to contract, "if tear down of any existing square footage is required by any authority prior to closing, buyer has option to terminate contract without penalty."
I know out here it wouldn't be an issue with FHA and unpermitted rooms. I would file for building permits and such after I moved in so that it is good to go for when you sell it, but they are good about retroactive permits in my area.
A lot depends on how the local jurisdiction handles these things.
Call the county and give them the address. Based on the use of words like "enclosed" and semi-finished" you likely are okay. That language is typically used to acknowledge a garage/patio conversion has taken place by many counties throughout Florida. The bathroom could be a different story but again I would ask. If the plumbing has not been moved you may be okay or just have to remove the toilet or sink to meet code if that. Good Luck.
Cully: I'm not sure 203K or Streamlined until I get certain things inspected. I wouldn't think it would matter, except that, if I know what the county would require, I might be able to get those repairs included. I suppose I could make their inspection a contingency to the contract?
David Billy, I spoke with the FHA. They don't care as long as the space meets their minimum standards. They said the lender could be more stringent, and it was ultimately up to the lender. The lender I'd been working with told me they would not give me a loan with unpermitted space...period.
The county building inspector said I could only get an 'after the fact' permit after I closed and would take the risk that they would/could make me tear it down, repair deficiencies or approve it. But, that's a moot point if the lender won't allow the loan. The inspector said it would likely have to be bought by an investor for that reason.
Yes, I think the agent spoke without really knowing. But it wouldn't be the first time I had to research and correct a false assumption.
In hindsight, I think maybe I should have just kept my mouth shut. Unless the FHA appraiser questioned it, I doubt the lender would have. I've been paying closer attention to listed houses, and so many of them, sold to individuals in many cases, showed space and/or other work where no permits were listed on the county appraiser or city searches. I would still stand the risk of being stuck if I went to resell it. I did run into that problem when I sold a house years ago in NJ. I listed it and got a contract of sale for a 3 bedroom house, the third being on the 3rd floor (attic). The buyer's lender would not permit them to buy it as a 3 bedroom and said they were not permitted to ever use it as such. They bought it anyway. We all agreed we doubted the bank would drive past to see if there were lights in the windows up there at night.
Chet, I agree. In an area where homeownership is so needed and, for the sake of all, aided, I can't understand why someone like me should have to bring it to their attention. Sad.
In any case, an investor did beat me to it anyway : / Live and learn.
Thanks ever so much for all your input!!
It's sure been a valuable learning curve for the next try.
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Really depends more on local custom...
