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Can you Sell a House with Code Violations?
Code violations span everything from breaching minimum construction standards to broken smoke alarms. While most building codes are designed to keep you safe, some cities aggressively flag homeowners who allow garbage to collect in their yards, don’t clean their pool or forget to mow their lawn. Often, the code violation is cleaned up before the house goes on the market and the buyer is never aware of it. Other times, code violations sink a real estate deal.
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What Are Code Violations?
If your home falls short of a county or municipal building code, it has a code violation. Many homes have some form of code violation. This is because building codes change all the time, and a house that was code-compliant when you bought it may now lag behind current standards. These innocent violations are “grandfathered” in, which means they are not regarded as violations if the home was up to code when it was built. Unless there’s a safety issue, you won’t have to bring the home up to current code.
Most serious code violations happen because the homeowner adds more living space without the proper permission. Other examples include water heaters or electrical points installed without a permit, failure to use non-flame retardant roofing material and the absence of smoke detectors: the list is endless.
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Once you purchase a home you inherit the violations along with it. Buyers want you to provide them with clear and marketable title: few buyers will buy a property with liens, fines and open code violations against it. Selling a home with code violations can be impossible. Many municipalities levy huge fines and daily interest rates on the homeowner and these penalties accrue for years after the illegal work is carried out. Decades after the event, the code enforcement officer can require the current homeowner to fix the problem and bring the home up to the most current building code – often at great expense.
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Can’t I Just keep Quiet About the Violation?
No, you can’t. By law, sellers must make certain disclosures about the property to potential homebuyers. For example, the federal government requires sellers to notify buyers about lead paint in the property. State disclosures vary by state, but typically require the seller to disclose known structural problems, defects with the HVAC, electrical and plumbing systems and known code violations. And, if the buyer asks, you have to tell him about code violations openly and honestly, regardless of disclosure law. Closing a deal without making the necessary disclosures can bring a heap of trouble. At the very least, you’ll have to compensate the buyer for any financial loss.
In any event, the code violation usually comes out during the buyer’s due diligence. If the home inspector doesn’t find it, the title company probably will when it checks the county records.
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Fixing Code Violations
If your property has open code violations and fines that are accruing on a daily basis, contact the city immediately. Many times, the city is willing to work with homeowners to fix the problem. You may even be able to negotiate the sanction down to a reasonable amount. What happens next depends on the specific violation. Often, homeowners can hire a contractor to close an open violation. You’ll have to pay for the corrective work and pay off any fines, but once the work is done you can list your home for sale. If the work is beyond your budget but you need to sell, some real estate investment companies may buy your house cash and deal with the violations themselves. Keep in mind that when investors buy these properties, they expect a deep discount on the purchase price so they have room to fix the violation and pay off the penalty.
