Title Ins or Errors and Omissions?

stomachmonkey · 10-15-2007, 09:56 AM

Just found out that I do not have all the CO's on my house.

House was re-built from the foundation up in 95. We went into contract before construction was finished.

Builder's plans on file with the town and the most recent CO from town both address the second floor as attic.

I have bedrooms and bathrooms up there.

The only thing I can think is that the building inspector signed off then the PO converted upstairs after the fact.

I doubt Title insurance covers that?

Think E/O would but not sure if I had/have it.

Thoughts?

legion · 10-15-2007, 10:00 AM

I'm not seeing how this would be a negative for you. Can you enlighten me?

Dueller · 10-15-2007, 10:05 AM

Ditto what Legion said. Taxes will be higher I'd guess with add'l bedrooms.

Back to your original question....how does this affect title? I can't see where it would.

flashgordon13 · 10-15-2007, 10:28 AM

Check your insurance policies. Most do not cover any part of the house that has no inspections or co. A freind at work just had a house fire and the ins. co. is not willing to pay for the addition that was damaged because he failed to get all the final inspections done and had no co for the addition.

stomachmonkey · 10-15-2007, 10:34 AM

Selling the house.

Came down on price to do an as is deal.

Buyers attorney is from his credit union.

Amended contract that any outstanding CO issues were my problem, not buyers.

I thought it was all legal.

So not only am I giving up more cash on the deal to correct it who knows if my buyer walks because property taxes will go up.

Legalizing the mods will increase living space by 50%.

I've been told that the town will "forgive" for a price, 3x's what the original permit fee would have been, plus the cost of an expeditor. We're not talking hundreds of dollars, it's thousands.

TerryBPP · 10-15-2007, 10:34 AM

They shouldn't have let you move in without a Certificate of Occ. You may open up a can of worms if you start digging around at the City or County. Are you still in touch with the contractor?

Joe Bob · Joe Bob's Garage

Quote:

Originally Posted by TerryBPP

They shouldn't have let you move in without a Certificate of Occ. You may open up a can of worms if you start digging around at the City or County. Are you still in touch with the contractor?

Ditto....at least in CA they require and inspection prior to sale...like what's hapening to you NOW. Look at the records back when you bought.

If the city Fuched up, why is YOUR problem?

stomachmonkey · 10-15-2007, 10:38 AM

Quote:

Originally Posted by TerryBPP

They shouldn't have let you move in without a Certificate of Occ. You may open up a can of worms if you start digging around at the City or County. Are you still in touch with the contractor?

There's a CO, just does not accurately reflect the state of the house.

legion · 10-15-2007, 10:39 AM

Quote:

Originally Posted by mikez

If the city Fuched up, why is YOUR problem?

When is it not your problem?

Joe Bob · Joe Bob's Garage

When you don't make enuff noise.

stomachmonkey · 10-15-2007, 10:42 AM

Quote:

Originally Posted by mikez

Ditto....at least in CA they require and inspection prior to sale...like what's hapening to you NOW. Look at the records back when you bought.

If the city Fuched up, why is YOUR problem?

Gov does not get involved with home sales in NY.

Funny thing is my attorney worked for the bank that financed the house for me 12 years ago. She represented them at closing.

When she 1st told me about the contract change I said fine, no problem. We are legal otherwise you would have said something about it 12 years ago when you were on the other side of the table.

She said some banks don't care about CO's, some do. Turns out my lender was one of those that did not care so it never came up.

MRM · 10-15-2007, 11:23 AM

I am missing why the buyer cares about certificates of occupancy. If he does, can't you have the city inspector do a final inspection and issue one? The work is all done and done to code, isn't it? Depending on the extent of the remodeling job it is possible that the city wouldn't issue a new certificate of occupancy for your scope of work.

Certificates of occupancy get issued when the construction is substantially complete and the home is inhabitable. As far as I know, only one is necessary. If the PO had the house built with an unfinished attic, got a C/O, and finished off the attic on his own, I don't think a C/O would be issued and I don't see how that would be a problem for your new buyer.

I don't think title insurance would cover this situation and I'm not sure E&O coverage would apply either.

Porsche-O-Phile · Porsche-O-Phile's Garage

Bringing it into compliance now could open up other cans of worms - energy codes have gotten much more stringent in some places in the last few years. Are you sure that they'll not require you to bring all that "new" habitable space into compliance with the current codes or will they grandfather you in under the codes adopted at the time of construction?

Could get very expensive.

RANDY P · RANDY P's Garage

well, the additions could be very well out of code, and that's a big problem in itself.

ALso, what happens if the house is destroyed? Did it just have an attic? Or an additional bedroom? Using current comparables then becomes a nightmare since the ins. co will want to use what it's "supposed" to have versus what you actually had.

I'd look closely at the appraisal and the value determined using that method - if they counted the bedrooms and used comparables with same bedroom count as you currently have that means your house value got jacked up along with the sales price.

It's been done where attics and whatnot have been "converted" to bedrooms, to change the comps, and raise the value. Lender will not know the difference and assume the appraiser inspected the permits, and the city will never know since they don't see the appraisal.

This could very well be an issue, most notably whether or not the mods are up to code and also it affects the value of the house.

rjp

RANDY P · RANDY P's Garage

PS - I wouldn't consider buying a house with illegal addtions on it. The appraiser probably tanked your value / sales price when they came out and saw all that - they typically factor in "repairing" the property (returning it to code) and subtracted that from the appraised value.

stomachmonkey · 10-15-2007, 11:44 AM

Quote:

Originally Posted by MRM

I am missing why the buyer cares about certificates of occupancy. If he does, can't you have the city inspector do a final inspection and issue one? The work is all done and done to code, isn't it? Depending on the extent of the remodeling job it is possible that the city wouldn't issue a new certificate of occupancy for your scope of work.

Certificates of occupancy get issued when the construction is substantially complete and the home is inhabitable. As far as I know, only one is necessary. If the PO had the house built with an unfinished attic, got a C/O, and finished off the attic on his own, I don't think a C/O would be issued and I don't see how that would be a problem for your new buyer.

I don't think title insurance would cover this situation and I'm not sure E&O coverage would apply either.

The buyers Bank Attorney cares. His mortgage is contingent on everything being in place.

Town code here explicitly prohibits using space designated as attic as Habitable space.

The plans and CO for the addition clearly designate the second floor as Attic.

To use the space as living space requires a permit and CO regardless of when the work was performed.

PO was the builder.

I'm sure the reason PO did what he did was to lower the tax rate.

The work is all done and to code so getting the permit and CO is a function of time and money. MY MONEY.

If we were talking $500 I'd say f' it and eat it. But we could be talking 10x's that with an increase in property taxes that could make the sale unattractive.

legion · 10-15-2007, 12:00 PM

Sounds to me like this deal won't work for you either way. The lender won't let it go ahead without a CO, but you won't pay the money to get a CO (and yes, I understand that it is substantial).

Maybe the best option is to let the deal fall through and hope the next offer comes from a lender that doesn't care about CO's.

stomachmonkey · 10-15-2007, 01:13 PM

Quote:

Originally Posted by legion

Sounds to me like this deal won't work for you either way. The lender won't let it go ahead without a CO, but you won't pay the money to get a CO (and yes, I understand that it is substantial).

Maybe the best option is to let the deal fall through and hope the next offer comes from a lender that doesn't care about CO's.

I have another guy that made an offer $10k higher than the current offer but he's a risky loan. Current buyer is a no brainer, 25% down and perfect credit.

I opted to sell to the 1st guy for less because I know, or thought I knew, that the deal was a slam dunk.

The simple business is

a) sell to guy 1 and deal with CO's and have it cost me $5k, (effectively take $5k less for the house)

b) sell to guy 2 and deal with the CO's and come out $5k more than if I sell to guy #1.

b seems to be the logical choice but the guy is shady, only has 5% to put down and the house would be in his GF's name only. Think he is trying to hide income from his ex wife. And after having met him a couple of times I get the feeling he will cause me more than $5k in aggravation on the sale.

My attorney is trying to use the higher offer to get guy 1's bank to back off.

RANDY P · RANDY P's Garage

You'll probably continue to run into this problem, if the lender caught it and that's what's causing you grief it will probably happen the next time around as well.

rjp

stomachmonkey · 10-15-2007, 01:40 PM

Quote:

Originally Posted by RANDY P

You'll probably continue to run into this problem, if the lender caught it and that's what's causing you grief it will probably happen the next time around as well.

rjp

Actually lender did not catch it.

Lender wanted to modify the contract to make any what ifs my problem.

I was convinced we were compliant because it was not an issue when I bought it and was ready to sign. My attorney put the brakes on and am I glad she did.

Someone f'd up when I bought so now I own the problem.

One of the wifes friends has a lead on PO.

I'll pay out of pocket if I have to but you can bet your ass I'm going after PO.

It's not the money, it's the principal of the thing.