Fannie sold me an ILLEGAL 2-unit property

11 Replies

Hello BPers!

I purchased a property from Fannie Mae via FHA financing in April near Chicago. The property is in unincorporated Cook County. After purchasing the property, I received a violation in the mail from Building and Zoning saying that a permit was never issued for the conversion of this property. I even spoke with Building and Zoning and they said this is a single family and no permits have ever been issued to convert it. They also said DO NOT RENT IT until you apply for a Special Use Permit (which takes 5 months to receive). This property was a single-family home and I believe it was converted about 10 years ago.

Now, how is it possible that Fannie Mae listed this property as a multi-family with 2 units on the MLS ? Taxes show it as multi-unit. The appraisal shows it as a 2 flat. I received FHA financing using the income from one of the units - otherwise I would not have been approved.

I am due in court at the end of June for this violation. Any advice or help is MUUCH appreciated.. this is scary to me as a first time buyer.

Marvin

Look at what you signed, I'm sure the seller's addendum said something about they have no knowledge of any zoning and the buyer should complete their own due diligence.   

The only odd thing I see is it's listed as multifamily on the tax rolls (or is just a multifamily zoning?).  Building permits, or the lack thereof, are almost always the responsibility of the buyer to verify.  Spend some time at the proper departments, and see what you can do to "get out ahead" of the process before you.  You may can make it easier/faster with some proactive action.

In Chicago, there is a difference between what the county has on file and what the city has on file.  The city supersedes the county in this respect.  Going to the county assessor site is not enough.  You have to go to the city to see what it is zoned as.

Thank you Cliff. That's helpful to know. However this property is not in Chicago. It is unincorporated and falls under Stickney Township. Would Stickney be who I have to contact? 

Yep, this is due diligence you need to do up front.  Listing agreements, listings and contracts always say "information believed accurate but not guaranteed."  You have no recourse against the seller for the "illegal" nature of your purchase.  Lots and lots of illegal duplexes out there.  Buyer beware.  Welcome to the school of hard knocks.

Originally posted by @Marvin Anaya :

Now, how is it possible that Fannie Mae listed this property as a multi-family with 2 units on the MLS ? Taxes show it as multi-unit. The appraisal shows it as a 2 flat. I received FHA financing using the income from one of the units - otherwise I would not have been approved.

It's possible because Fannie Mae doesn't list the property.  It's listed by a realtor representing Fannie Mae.  It's also possible because there's no correlation between tax records & the building & code records.  We'd be asking too much of our gov't to be more efficient.  

I am due in court at the end of June for this violation. Any advice or help is MUUCH appreciated.. this is scary to me as a first time buyer.

Advice for what you do now-   Hire a Chicago Real Estate Attorney to go to court.  There's a fraternity of attorney's that have relationships w/ the judges & can get this squashed. 

In the future- Always check the Chicago Building Code site for any violations as part of your due diligence or ask your attorney to do it.  Title companies do not do this.

I think if you go into your court date/meeting, just tell them your story.  Probably you will be OK.  You might have to pay a fee for the right permit, but it should not be too bad.  I would try the full mea culpa, and see if they will let it stand as a two unit

Originally posted by @Crystal Smith :
Originally posted by @Marvin Anaya:

Now, how is it possible that Fannie Mae listed this property as a multi-family with 2 units on the MLS ? Taxes show it as multi-unit. The appraisal shows it as a 2 flat. I received FHA financing using the income from one of the units - otherwise I would not have been approved.

It's possible because Fannie Mae doesn't list the property.  It's listed by a realtor representing Fannie Mae.  It's also possible because there's no correlation between tax records & the building & code records.  We'd be asking too much of our gov't to be more efficient.  

I am due in court at the end of June for this violation. Any advice or help is MUUCH appreciated.. this is scary to me as a first time buyer.

Advice for what you do now-   Hire a Chicago Real Estate Attorney to go to court.  There's a fraternity of attorney's that have relationships w/ the judges & can get this squashed. 

In the future- Always check the Chicago Building Code site for any violations as part of your due diligence or ask your attorney to do it.  Title companies do not do this.

 Thank you for the information and insight Crystal, GREATLY appreciated!!

Originally posted by @Derek Walvoord :

I think if you go into your court date/meeting, just tell them your story.  Probably you will be OK.  You might have to pay a fee for the right permit, but it should not be too bad.  I would try the full mea culpa, and see if they will let it stand as a two unit

 Thank you Derek! It's the best I can do for the moment - I'll just be honest with what happened and tell them I want to satisfy the violation and comply with zoning laws.

Originally posted by @Jon Holdman :

Yep, this is due diligence you need to do up front.  Listing agreements, listings and contracts always say "information believed accurate but not guaranteed."  You have no recourse against the seller for the "illegal" nature of your purchase.  Lots and lots of illegal duplexes out there.  Buyer beware.  Welcome to the school of hard knocks.

 Jon, thanks for welcoming me into the school of hard knocks - I certainly am learning the hard way on my first property. I hope to not make the same mistake twice on this one..

Don't worry.  There seem to be an endless stream of new mistakes.  It will get easier.  A tagline used on some other forums I visit is "patience and persistence will overcome most obstacles."  I find that a pretty good thing to remember when the going gets tough.

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