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We have made an offer on a home (in North Carolina, United States). We noticed a discrepancy between the county's assessment of square footage, and the actual square footage. Additions have been made to the house. The inspector didn't find any serious problems with the house (electrical, foundation, etc).

We do not know if the additions were properly permitted. If they were not, there is a chance the owners have a responsibility to retroactively permit (if the additions were made after 1986, this holds).

I am getting frustrated because our real estate agent is not helping us with this matter, but wants to just "let it slide." She is saying if we want to persue it, we should go to the city to figure out what's going on. My attitude is this is the sort of thing we are paying her for, that she should work with the sellers' agent and figure this issue out before we buy the house (we are still in due diligence period).

Am I being reasonable to expect her to work to figure this out, or is she right that this is something we need to take care of? It seems everyone just wants us to pretend there is no problem here, but everyone except us has a lot to gain from letting it slide, so I'm a bit paranoid.

Update

The seller's agent let us know that the additions were all done long before their client moved in, so the work was done before 1986. They also have provided all permits for minor work that has been done since 1986. The only problem remaining is how do we prove the other work was done before 1986, if the city asks us to do so? I guess that's a different question, and probably not right for this forum?

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    Generally it is the buyer's responsibility to verify permits. Your agent can do it for you, or not - the responsibility is still yours. – littleadv Oct 15 '15 at 5:09
  • That's useful to know. Is it something the agent usually does, or would it be exceptional? – neuronet Oct 15 '15 at 5:18
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    I have yet to meet an agent who'd do that, its a huge liability. You're on your own, I'm afraid. – littleadv Oct 15 '15 at 5:56
  • Interesting....seems strange! – neuronet Oct 15 '15 at 6:24
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    Littleadv is correct. Issues regarding title, code, or properly executed permits for past work are legal matters that would come up from inspection, title search, etc. On the other hand, when a realtor says "don't worry" about issue like this, you should find a new one. They do not have your best interest as a priority. – JoeTaxpayer Oct 15 '15 at 12:25
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Real estate rarely comes with 100% guarantees. If there are issues with the permit history of the house then an option you have is to go ahead with the purchase regardless. This is a judgement call that you have to make. There is no right or wrong answer here.

You have to assess the risks involved. How likely is it this discrepancy will be discovered by the building department? What are the consequences that might occur if your building department takes issue with this discrepancy? What problems might this cause when you come to sell the house?

I don't know how it is in your city/county but in my jurisdiction the building department is not out for the blood of homeowners. If an existing remodel is well constructed and otherwise complies with building codes then it's probably going to stay under the radar, but that's not a guarantee. It sounds like the "1986 rule" might give you a plausible defense to a building inspector if you ever got into a dispute situation. I don't know the details of this rule in your jurisdiction and what might happen if there were a dispute.

Another option is to use this issue to get a discount. You can leverage your option to cancel the contract. Tell the seller you are only willing to go forward with the purchase if they agree to adjust the sales price. Maybe the house is still worth buying but it's not worth as much as you thought when you wrote the original offer.

The final option is that you can cancel the entire contract if you are still uncomfortable with the situation

Whatever option you choose it's really up to you to do whatever research you need. Your realtor might be willing to help with some of that but its going outside the scope of what a realtor does and you may find he gets uncomfortable getting too involved. There are liability and licensing issues that arise in this situation. The realtor can deal with translating whatever option you choose and putting it in the correct legal form to present to the seller.

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If you made the offer pull it back. State that you have found a discrepancy in the county records.

Then reissue the offer but this time add a provision that they have to submit evidence of all permits for the addition. If the seller won't provide that then the deal shouldn't go through.

If your agent talked you out of adding the provision you have to consider that they might not be the best agent for you. They should insist that the seller provide the evidence, then leave it up to you to evaluate the evidence.

What could go wrong?

Lets say the city insists on doing a through inspection as part of the sales process, and they note that one of the additions has not been permitted. If it turns out that it was built too close to the property line they could force you to remove it. Now you paid thousands to buy the addition, and then thousands to have it removed.

Even if the structures fit on the property, the city could still decide the addition was not built up to code. They could force you to bring them up to code.

If you jump ahead and you decide that you need to get a loan to upgrade the kitchen. The lender could reject you if they discover the discrepancy in permits. The insurance company could decide to not rebuild what wasn't permitted, or if they attribute the cause to the improper addition they could invalidate an entire claim.

  • This seeems reasonable, though I'd resist something so drastic in this case as we have been looking for six months in this neighborhood in a frenzied sellers' market. We got lucky to find this location, great price, great house. We don't want to push 'em to sell to one of the other many bidders. The seller has provided additional information now added to the question (their agent is very proactive, has been more helpful to us than our agent). The inspection didn't reveal any big problems (a detail I've also added). – neuronet Oct 15 '15 at 12:51

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