Illegal conversion must be undone
Who's responsible: inspector, seller, appraiser?
June 23, 2009
By Barry Stone
Inman News®
DEAR BARRY: The home I just bought has a workshop that was converted to a studio apartment, but no one told me that the conversion was not permitted. Now the city wants me to convert it back. I used all my money to buy the property and can't afford the construction costs. No one disclosed this to me: not my home inspector, the appraiser, the seller, or the agent. Do I have any recourse? --Norman
DEAR NORMAN: Let's run through the list of suspects:
1. The home inspector, if he was sharp and experienced, should have advised you to consult the building department to verify permits for the conversion. Many home inspectors routinely recommend permit searches to all of their customers, whether or not the property has been altered. But there is no requirement for home inspectors to offer this kind of advice.
2. The same holds true for real estate agents. If they are truly competent and highly professional, they will advise their clients to check the permit history of the property in escrow. In fact, some agents actually take the time to do the permit inquiry for their clients. But this is not a required procedure for Realtors.
3. Appraisers are generally concerned with the legality of additions and other alterations, because this directly affects the appraisal value of the property. It would be unusual for a competent appraiser to overlook this aspect of a property.
4. The sellers were required to disclose all conditions that would be of concern to a buyer. If they were aware that the conversion was done without a permit, especially if they did the conversion themselves, then they should have disclosed it.
As for recourse, you'll need to consult a real estate attorney to determine what remedies are available to you under law.
DEAR BARRY: I recently inherited an old home that is in general disrepair. I want to sell it but am concerned about disclosure liability. I'd like to do an as-is sale and simply disclose all the defects I am aware of. If a buyer signs an as-is contract, can I still be sued or held liable for defects that I fail to disclose? If so, how can I protect myself? --Patricia
DEAR PATRICIA: Disclosure liability can always be reduced, but it can never be eliminated completely. This is because people can file lawsuits for good reasons, for bad reasons, or for no reason at all. The objective, therefore, is to eliminate as many reasons as possible.
If you provide full and honest disclosure, you can do an as-is sale, and your chances of ever being sued will be small. The best way to do this is to hire a highly qualified home inspector to provide detailed disclosure of the property's condition. In addition, you should advise the buyers, in writing, to hire their own home inspector to make sure that no important defects were missed by your inspector. If you do those things, you should be reasonably safe from legal actions if defects are discovered later. In the event that a legal claim should arise, you would have evidence to show that your intentions were unimpeachable.
To write to Barry Stone, please visit him on the Web at www.housedetective.com.
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