How Homebuyers Can Mitigate Risks When Purchasing Renovated Homes
Buying a home, even if renovated, poses significant issues for homebuyers. Hiring a real estate lawyer is your best protection because of all the necessary and proactive steps we take to ensure your investment is sound.
Several proactive steps we take at Law Offices of Jacqueline A. Salcines, PA to ensure that renovations were properly permitted and adhered to building codes before making a purchase include:
1. Thoroughly investigate the property’s permit history
- Ask for Proof of Permits: Request documentation from the seller proving that all necessary permits were acquired for any significant renovations, such as moving walls, updating electrical or plumbing systems, roofing, or additions.
- Check Local Permit Databases: Many municipalities provide online databases where you can search for permits by property address. Review these records to verify that the information aligns with the seller’s claims. In Coral Gables, you can access permit information through the Development Services Department. In Miami-Dade County, building permits and plans, Certificates of Occupancy and Use, and zoning records can be searched online for free.
- Contact the Local Building Department: If online resources are unavailable or incomplete, directly contact the local building department to inquire about permits for the property. This allows you to verify permit status, obtain information on past inspections, and understand any open permits that might impact the sale or future renovations.
2. Engage professionals for due diligence
- Hire a Qualified Home Inspector: A licensed home inspector can identify potential code violations, structural issues, or safety hazards that may indicate unpermitted work. We have checklists that can help home buyers understand what is and isn’t covered in a typical inspection.
- Involve Your Real Estate Agent: Your real estate agent, especially if knowledgeable about the local market and regulations, can assist in researching permit records and advising on potential implications of unpermitted work.
3. Understand the implications of unpermitted work
- Legal and Financial Risks: Be aware that buying a home with unpermitted renovations can make you, as the new owner, liable for fines, penalties, and potentially having to bring the work up to code or even remove it entirely.
- Insurance and Lending Issues: Unpermitted work can complicate obtaining or renewing homeowner’s insurance, potentially leading to higher premiums or denial of coverage in case of damage related to the unpermitted work. Mortgage lenders may also hesitate to finance a property with unpermitted work, potentially requiring a larger down payment or even rejecting the loan application.
- Resale Value and Future Renovations: Properties with properly permitted renovations tend to command higher prices and attract more buyers, while unpermitted work can diminish resale value and hinder future renovation plans.
4. Include inspection contingencies in the purchase agreement
- Inspection Contingency: Incorporate an inspection contingency into your offer, granting you the right to have a thorough inspection within a set timeframe. This allows you to negotiate repairs, request a price reduction, or even withdraw from the purchase if significant issues or unpermitted work are discovered.
If you have concerns about unpermitted work or the seller’s disclosures, consult with us. We will help draft the contract to protect your real estate purchase and help you understand your rights, responsibilities, and available options. This is particularly important in states with “caveat emptor” (buyer beware) laws where the seller may not be obligated to disclose certain defects.
By taking these steps, homebuyers can mitigate the risks associated with purchasing renovated homes and ensure that their investment is sound, safe, and legally compliant.