I am in the process of negotiating a deal for a completely renovated duplex (e.g. major structural changes, some add-on bedrooms, copper plumbing, tankless water heaters, etc.) in LA and the seller is adamant about removing the following stipulations from the offer:
"Seller shall pay the cost of compliance with any other minimum mandatory government inspections and reports if required as a condition of closing escrow under any Law."
"Seller shall pay the cost of compliance with any other minimum mandatory government retrofit standards required as a condition of closing escrow under any Law, whether the work is required to be completed before or after COE."
Has anyone had any experience with this type of situation? Does anyone know where I can find a list of these government requirements? Are there any resources I can use to find out?
Also, the seller wanted to remove the following stipulations as well:
"Seller shall pay for installation of approved fire extinguisher(s), sprinkler(s), and hose(s), if required by Law, which shall be installed prior to Close Of Escrow. Prior to Close Of Escrow, Seller shall provide Buyer a written statement of compliance, if required by Law."
"Seller shall pay for installation of drain cover and anti-entrapment device or system for any pool or spa meeting the minimum requirements permitted by the U.S. Consumer Products and Safety Commission."
"Seller shall pay for any private transfer fee."
Does anyone have any thoughts or advice regarding these stipulations?
Any help would be greatly appreciated! Thanks!
We have some experience with this. The City of Los Angeles has several ordinances which require that homes to be retrofitted for things like water conservation and seismic activity as part of a standard sale. These retrofitting need to be signed off by someone at the city and are usually addressed as part of escrow.
A general inspector who works in the City of Los Angeles will be very familiar with the requirements and should be able to help address the issues.
Here is a list of retrofitting requirements that I found online:
It's not unusual for sellers to not want to pay for this, especially if they are marketing the home "As-Is". But the buyer should know that they will be on the hook for these costs as they must be completed for the sale to be completed.
Assuming you are working with a professional escrow company, they should be able to fill you in all the details.
I think the private transfer fee only applies to new construction (usually), but again, escrow can tell you if it applies to your sale. It's usually .5 - 1.75% of the gross price.
More info on Private Transfer Fees here:
@Dominic Chi Did you try to ask your local building department? Some do have these info. If this is a new retrofit, it should be up to code already, if seller does not want to sign the clauses, it might be that he is holding back on something. Hire a professional to evaluate the scope needed to get up to compliance. The clauses are too broad, I know some compliance units but then there are overlapping laws also.
If you are worried about LA Retrofit, which is the same sort of thing as a CIty Occupancy Certificate, or what that contract language is talking about you can call these people for a free estimate to see if you meet the code.
Is it ok to post? No affilation and they do free estimates!
Its basic stuff and anything newly built would have all the things needed. Almost all of it is stuff you can DIY cheaply if you don't. The one tricky thing is the seismic shut off valve on the gas meter. MUST be done by Lic contractor and costs about $150 bucks.
I have used Compliance Alliance before, and they were very cool. They did the estimate and went over what we needed to do exactly. The placement for CO2 and smoke detectors is VERY specific.
After they left, we did all the work ourselves minus gas meter, then before COE they came back and did that for us. You don't pay if you don't pass inspection. You can even have it rolled into escrow, tho we paid cash.
I don't know if sprinklers are required in any residential building in LA. Might be worth looking up in the building code. I live in a high fire area and I am not required to have them. I do have to do major brush clearance!
Updated about 3 years ago
I take that back, we did have it rolled into escrow. We paid for it, but we put it there in case the deal feel through the seller would pay us for bringing the house up to code
@Verna M. Good stuff. Not much use to me but would probably need in future projects. Public buildings have a really stringent retrofit requirements with several government agencies, but the residential sector seems to be pretty easy. Thanks.
Typically, the verbiage is referring to certificate of occupancy, which varies in complication from one city to another.
Generally, it's more tedious work, such as carbon monoxide installation, smoke detectors, sometimes installing a lawn, etc. But this doesn't mean in your case it can't be a major problem that requires resolution.
I personally wouldn't remove it, unless:
1. "As is" buy
2. Credits will be applied upon close of escrow.
3. Price reduction.
Otherwise, it's the owners property, and they should make sure it's in compliance before I, or anyone else purchases it. If the seller is pushing for the removal, given all the work that has been done, maybe they know something you don't know.
i agree. If they are firm about it being removed they know it won't pass. I would request an estimate before signing off on it.
I had the estimate done before we wrote up the purchase agreement so we knew the costs. I offered to cover the cost as it was a mostly as is deal.
Dave, I need a four unit in Ventura!I should put that in my Sig.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.