I'm selling a flip in TX and there is a PVC drain redirect running outside along the back of the house and connects into the ground to get to the city drain. This was a DIY fix from the previous owner and unknown to me was not up to code. The pipe functions just fine as intended. Without my or my Realtor's knowledge, the buyers agent contacted the city to see if a permit had been pulled on the house to try and find out if the pipe would be up to code, there was no permit and advised my Realtor of this. He also went on to advise my Realtor that "it's illegal to be aware of this issue and not fix it and that she could lose her license if she did not advise me. He also said "regardless of who buys the house I have to legally get a permit and make sure everything is up to code." Basically, I'm trying to find out if what this buyers Realtor is saying is true; whether or not if everything he's saying is true, or just some of it, or none of it at all. This guy has quickly taken over the number slot on my sh!t list....
Yes, it's a common practice to check to ensure your client is not buying a problem that will come back to haunt them later. You have two choices - to sell the house as-is with disclosure of the non-compliant construction or get a permit and have the city sign off on it once it meets code.
Regardless of your choice, one thing is clear. Once you know that unpermitted construction was done on your home, you must, by law, disclose the issue to all potential buyers. You’ll most likely do this on a state-specific disclosure statement, which typically (in most states) asks the seller to report any known legal issues or unpermitted construction on the property.
As for your agent losing his/her license, your Realtor is required to disclose things they know or "should have known" were improper so fairness is provided to all parties. Your state board could take action if they feel his/her actions were not sufficiently forthcoming to provide fairness to all as it impacts the impression of the profession.
You're best bet is to have the repair done to code and remove the worry of it ever coming back on you.
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