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Posted almost 9 years ago

When Inexperience Meets Bad Judgment: A Case Study

Just this spring a young and inexperienced investor approached our company about an issue with his flip house. It seems he had purchased the house from another investor who had started work but was unable or unwilling to complete the project. There was an incomplete office/bedroom addition at the back of the house and the beginnings of a very substantial foundation repair that was permitted by the city. Our owner, in good faith, hired a contractor to complete the project.

Once the foundation and repairs to the concrete surface were complete, the general contractor “applied for permits” and commenced construction. Finish or repair paint, flooring and kitchen as well as to modify a bedroom/office addition at the back of the house to increase the square footage. Once complete, our investor put the house on the market. This is where the problems began to show up.

A prospective buyer made an accepted offer. The buyer wanted to rent the house to vacationers. So he went to the City for the permit for VRBO operations. However, The buyer found out that none of the work done by the contractor was permitted. In fact, there was no indication that a construction permit had ever been pulled by the contractor.

After our review with the investor, we determined that, though permitted, the foundation repair was not finished with a smooth level surface, leaving the now wood covered floor feeling ‘bumpy.’ The “addition” was built like a heavy-duty deck, relying on the house foundation for half of its support and two piers with a double beam for the remainder. The addition was not permitted. The contractor has our investor’s money and can’t be contacted at which time our company wass asked to solve the problem that will cost thousands to solve.

Professional integrity is critically important. Get references. 


Comments (3)


  1. So I guess the take away is ask to SEE the permits?  How do contractors typically respond to that?

    Thanks for the warning!  


    1. #ChristyBarton, I cannot speak for other contractors (though I wish it were always the case). We have made a practice of being as transparent as I know how to be, right down to how much money a customer is Actually paying my company (we collect fees based on project milestone completion rather than as a profit margin or monthly fee regardless of performance). We also work in a locale (Austin, TX) where it is possible for anyone to determine permit status online by doing a simple Google search. 

      Buyer beware! Ask questions and get answers.