Dear Barry,

I’m embarrassed to confess that I broke your cardinal rule: I bought a property without having it inspected, and now the chickens have come home to roost. The building was originally a single-family home, but the seller divided it into three separate living units by adding two kitchens and a few partition walls. The conversion was nearly completed and the property seemed to be in acceptable condition. All that remained was some patch-up work in the new kitchens. But now the building department says the conversion is illegal and I can only have one kitchen in the building. The trouble is, I need three rents to cover the mortgage. What can I do? – Bernard

Dear Bernard,

Bypassing a pre-purchase home inspection has placed you in a position for which there may be no satisfactory solution. The building department is the final arbiter of what is and what is not a legal and acceptable use for a building in a given area. If the property is specifically zoned as a single-family residence and the building department has decided to uphold that restrictive use, you have no choice but to comply with their requirements. Not only will you lose the benefit of the additional rental income, you must now incur the costs of reconverting the building to its originally intended use. Such are the unfortunate consequences of having avoided due diligence as a prospective buyer.

The lack of a home inspection, however, was not the only error that occurred during this purchase. Of vital importance also was a determination of the permit status of the work that was done. When buying a property that has been altered in any significant way, it is essential that buyers learn whether the work has been done with permits and has been signed off by the building department. In the absence of legal approval for property changes, financial consequences, as in your case, can be severe.

A further concern in this transaction is the matter of seller disclosure. If the work on the property was done without a building permit, the seller was obligated to reveal that circumstance on the disclosure statement. Failure to divulge matters of importance is a violation of law in most states. In that regard, the seller would seem to bear some liability for your current position. Legal counsel on that point would therefore be prudent.

Since you have already confessed the error of having foregone the services of a professional home inspector, we shall forego the admonitions befitting your investor transgression. However, a reminder of the prime home buyers’ commandment, “Thou shalt not forego a home inspection,” is offered once again to all readers. A qualified inspector is likely to find a list of defects in an unpermitted project, and a truly diligent inspector would advise that the building department be consulted regarding permits.

When buyers forego a home inspection, they save a few hundred dollars that could have spared them thousands. Nothing should ever be assumed when making an investment as expensive as residential or commercial real estate. Buyers need to know what they are buying before they buy it, rather than supposing that the outcome will be in accordance with presumed wishes and desires. Foreknowledge is essential because expectations do not always equate with results. Or to paraphrase an old adage, “Don’t count your kitchens before they’re patched.”

To write to Barry Stone, please visit him on the Web at www.housedetective.com.

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