We real estate agents are used to changes and updates; they happen so often that we’re in ‘school’ all the time.  Any service provider in the real estate industry faces these issues.  But changes are important and usually they are put into place for the sake of disclosure, so that all parties have a clear view of what they are either selling or buying, because these are big transactions.  So the one I want to mention today is about governmental compliance in disclosures.  

If you’ve sold a property in recent decades, you know you have to fill out what we call a ‘seller disclosure’, which asks about ages of systems components, whether or not you know of any issues, how much your HOA dues are and what they cover…even whether or not you HAVE an HOA.  You’re asked about the exterior cladding, whether or not there fuel tanks on the property, whether or not there are any big noises or noxious fumes in the vicinity, whether or not there are drainage issues…and those are just a few.  Until recently there was no request to disclose ‘governmental compliance’. 

Well what is that?  Let’s take permitting as an example.  In the past, if you had added on to the property without permits, you could just exclude un-permitted space from the advertised square footage. You couldn’t give it the same value as the permitted spaces, or you gave it no added value.  I always cautioned my buyers not to move forward with an offer in these cases, because if an addition is not permitted, what they used for wiring, for example, could represent a very dangerous hazard.  But ultimately it was up to the buyer if they wanted to risk it.  Now, however, sellers are being asked to state whether or not they are in violation of any governmental mandates…like permitting.  And septic permitting as well, for example.

Importantly for buyers, if you buy a property with un-permitted space, it will become YOUR issue when you sell.  So just be aware, and careful.

It is important to know that many municipalities purge their records in what I believe to be a short time.  Sometimes under 10 years.  So by the time you get all of the required permits, add on a den, and years later sell the house, your records could be gone.  It gets sticky at that point.  You know you permitted but you can’t prove it; your buyers don’t believe you but they cannot prove you did not.  Sounds like attorney time.

So.  Homeowners, PLEASE keep good records of renovations so that you can prove you got your permits.    And agents, review this stuff with your clients way ahead of time.  If your clients can’t find the permit, maybe they can find the place where they paid for it.  That can go a long way to resolution in some cases.  It’s not enough to claim ‘no representation’ anymore.  I sometimes call that choice the ‘I don’t know and I don’t care’ choice.  But you can find yourself in a bind if it relates to governmental compliance.

By the way, if you don’t think you need a real estate agent, think about this stuff.  We know what to look for ahead of time, to avoid these roadblocks.  This can be important when Due Diligence funds are on the table.