Legal Question about previous owners of a duplex I bought

11 Replies

I purchased a duplex that I have lived in for a couple of years. It passed all inspections when I bought it, however I quickly realized there were many problems hidden behind the walls. I did some digging and found out the the previous owners had renovated the entire place, without pulling a single permit or having a single inspection done. I will try and keep it concise on what was wrong just to give an idea; the first winter all my pipes froze. When I opened the wall up I found that the insulation was on the wrong side of the pipes, trapping the pipes against the cold outside wall. When i did that I saw that the dryer vent was smashed into the wall, almost flat to fit. It was full of lint, not a matter of if, but when that would have started a fire. That was just the tip of the iceberg, I've had electrical, plumbing, and many more problems with the house. Needless to say it wouldn't have passed insulation, framing, electrical, or plumbing inspections had they been done. Not to mention there were walls removed without an engineer signing off. Not only was it illegal, but its dangerous to me and my renters. My question is do I have any legal ground to stand on to go after the previous owners? I am about to sell this property, and I have spent a lot of money and time fixing what I have found and can, but do I have to disclose this even though I didn't renovate it?

Lesson learned in all of this is if you buy a renovated property, to double check the permits pulled on the property. 

Old owner has no legal obligations. Responsibility passed to you at time of sale.

This is a loaded question. Answers will vary state to state. I am not an attorney and this is not legal advice.

However...

Does your state requires sellers to provide a property disclosure when listing/selling a property? And did you receive one? If so, the answers on the seller's property disclosure would likely determine whether you have any recourse. 

There was a pretty high profile case of a couple getting a hefty fine and some jail time over a fraudulent property disclosure here in Florida a couple of years ago:

http://www.tampabay.com/news/courts/couple-charged...

Yes, you are supposed to disclose any information like, pipes freezing, that kind of thing when you sell the property. The problem lies in proving intent. I know they lived there for one of the coldest winters in MN, so I know they knew the pipes froze, but being able to prove that is a tough thing from a legal stand point. I talked to an inspector about this and he basically told me to stop talking, because if he hears about all this non-permitted work being done he would have to come rectify it. Saying I would have to pay the fines, and he could just rip my deck off because it was built without permit. I just think that is awful that someone could get away with this. And now that I want to sell I want to know how much responsibility I will bear for all of their misdoings. 

Thanks for your response. 

@Jeff Copeland brings up an excellent point.  What does the seller's disclosure say?  If it claims the work was permitted or disavows knowledge of any unpermitted work, then you may have a case.

The inspector is correct, though.  This is your problem now.  I've been there and spent a considerable sum of money inflicting damage on a property to allow inspectors to do their job.  Then repairing all that damage.

Whatever your course, if you wish to sell, you must disclose known problems or be facing a lawsuit. Check your paperwork and see if seller signed a disclosure? I have a local friend that just got cited by code enforcement for unpermitted driveway and deck. Seller HAD signed a disclosure, also stating everything was permitted. She now has to hire an engineer to hopefully sign off, pay the permit fees (and fines), etc. She is going after the previous owner once resolved and she has paid all costs to rectify. Sucks, but that is the way it works. You might see if an attorney will give you a free consultation as to your situation. 

I would also suggest you pull up the seller's disclosure statement you received however I doubt it will help.  In MN you can agree to waive the seller's disclosure, which I always do on investment properties I sell, which limits the seller's risk for unknown problems.

The reason I always fill out the alternative disclosure (waiver) is because I have not personally lived in any of the properties and I am not aware of all the risks.  For example, the basement could let in a little water during big storms but if the renter doesn't tell me about it I have no idea.  Therefor I am not comfortable signing a legal document saying there are no water problems.  I am not trying to hide anything, I just don't want to be on the hook for something I don't know.  It is pretty common in MN for buyers and sellers to agree to waive the disclosure and the buyer conduct their own inspection if they want.  I suspect when you look back you will find you did the same.

If you got an inspection on the property you may want to reach out to the inspector if anything was obvious but I don't think you will get any help there.

You could also try to get an attorney to send a certified letter saying you are considering legal action if you can't come to a resolution but any additional fees may not be worth it.

If I were in your shoes I would remedy the safety issues (electrical, plumbing, etc) with licensed contractors making them pull permits, consider this a lesson learned, and move on.  If you are purchasing anything which looks like it has been renovated it is a good idea to check permit history or at a minimum look at the electrical panel to see if there is a new signature on the box.  

If you chose to sell it, you also have the option of waiving the disclosure but you may consider a quick call with an attorney to determine your risk, if any.  I personally wont sell a house knowing it has problems so I would fix it the best you can and try to move on.  Even with a waiver not disclosing a known material problem may put you at risk.  The permit issue may not be material in itself, you wouldn't have an issue if it was all completed correctly.

i was wondering how you know that the renovations were done by the seller? And how you know no permits were pulled ? And now that you have found problems , are you pulling permits to solve the problems ?  If not whats the difference between what you are doing and what the previous person did ? 

I have looked at many houses in my day and the only way to determine whether a permit was pulled was to contact the county inspectors . Now the catch 22 is once I do that I could be opening a can of worms . 

@Matthew Paul the sellers had no problem telling me about the renovations they did because on the outside they looked great. The design was great, and I easily found the listing from when they purchased it.

My contractor looked up the permits on the house with a simple internet search. It shows everything, including the complaints as well as when the truth and housing was done. Which I found out was 4 days AFTER the PA was signed. I ended up running into their agent at another property about a year later and she tried to duck me. I caught up to her and confronted her and she played dumb at first. But when I showed her all the info she caved pretty quickly. Begged for me not to get her any trouble for the late truth and housing and swore she didn't know about the house problems. I didn't feel like ruining her career because of some bad clients. 

Its def a lesson learned, I was a newbie then and would never buy the duplex again. Luckily the duplex market is crazy in Minneapolis right now so I should be able to at least break even. 

@Brandon Giarusso

I am no lawyer, but here are my 2 cents. First look at the seller disclosures. If they signed a seller disclosure alternative even though they have lived in the property, it may be a fraudulent transaction or you may be covered by broker(s) E&O insurance. If they have signed a disclosure, they should have answered a question: "Are you aware of any work performed on the property for which appropriate permits were not obtained" - if they said no - you may again have a recourse. Have you signed an "as is addendum" ? if you had, you may have limited your options. Did you hire an inspector? If he failed to indicate some of the deficiencies, his insurance may be liable. Did the sellers have any trade licenses, like an electrician, real estate agent, general contractor? That may affect your options.

Have you been represented by the RE agent? Start by talking to his broker. Next talk to the attorney, specializing in real estate. Good luck.

Originally posted by @Brandon Giarusso :

@Matthew Paul the sellers had no problem telling me about the renovations they did because on the outside they looked great. The design was great, and I easily found the listing from when they purchased it.

My contractor looked up the permits on the house with a simple internet search. It shows everything, including the complaints as well as when the truth and housing was done. Which I found out was 4 days AFTER the PA was signed. I ended up running into their agent at another property about a year later and she tried to duck me. I caught up to her and confronted her and she played dumb at first. But when I showed her all the info she caved pretty quickly. Begged for me not to get her any trouble for the late truth and housing and swore she didn't know about the house problems. I didn't feel like ruining her career because of some bad clients. 

Its def a lesson learned, I was a newbie then and would never buy the duplex again. Luckily the duplex market is crazy in Minneapolis right now so I should be able to at least break even. 

What website did you use to search the building permits and truth in housing dates? 

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