seller unwilling to provide C.O.C. and Zoning

7 Replies

Hey everyone, I'm new to Bigger Pockets and new to investing. I work as a sales engineer but have been spending the last year researching the real estate game and the B.P. community seems to be very nice and helpful so I'm glad to be here! I found myself to be in a bit of a predicament with a property I'd like to purchase and was wondering if you guys could offer some advice.

I found a house (student housing in upstate NY) and the home seems to be in good shape so I made an offer which they accepted. However, the seller does not want to produce a Certificate of Compliance or zoning. There is no fire escape from the third floor which to this point I believe has been grandfathered in but if a state inspector is welcomed in the house he will most likely require one be put in. The seller is also afraid that a state inspector will raise the taxes. I understand his fear of me walking after he has the inspection done and he is left with all these bills but I also do not want to get screwed on my first deal. Another fear of mine is that he knows there are too many non related people living in the house at one time and the decrease the number of occupants after I have made the deal will drop my ROI and it will have been a poor deal.

Has anyone had a seller unwilling to provide these documents before? Part of me wants to try to move forward and just not get the state involved because lets be honest, when have they helped? Is that too risky? 


Thanks!!

@Andrew Cardillo - where in upstate NY?  Is that customary in that area?

Where I invest we do not have a certificate of compliance and in the 2 cities I invest in, only one has a zoning certificate and that is required to close on a property.  So make sure what you are asking for is typical of that area 

Originally posted by @Andrew Cardillo :

Hey everyone, I'm new to Bigger Pockets and new to investing. I work as a sales engineer but have been spending the last year researching the real estate game and the B.P. community seems to be very nice and helpful so I'm glad to be here! I found myself to be in a bit of a predicament with a property I'd like to purchase and was wondering if you guys could offer some advice.

I found a house (student housing in upstate NY) and the home seems to be in good shape so I made an offer which they accepted. However, the seller does not want to produce a Certificate of Compliance or zoning. There is no fire escape from the third floor which to this point I believe has been grandfathered in but if a state inspector is welcomed in the house he will most likely require one be put in. The seller is also afraid that a state inspector will raise the taxes. I understand his fear of me walking after he has the inspection done and he is left with all these bills but I also do not want to get screwed on my first deal. Another fear of mine is that he knows there are too many non related people living in the house at one time and the decrease the number of occupants after I have made the deal will drop my ROI and it will have been a poor deal.

Has anyone had a seller unwilling to provide these documents before? Part of me wants to try to move forward and just not get the state involved because lets be honest, when have they helped? Is that too risky? 


Thanks!!

 Hello Andrew,

It seems that you are dealing with several issues. 

I am an architect here in NY and have much of my experience in NYC and Westchester County. Where is the property located, what village/town? Your title company will provide you with much of the documents you are seeking however that's once you are further along in the buying process. (Unless you have connection with one that can get you info prior to closing.) You want to have an idea about the home's legal use in order to figure if it's a deal. Therefore, firstly, I'd caution you to find out what the property is zoned for. The seller's apprehension may be because he is housing more un-realated people than allowed or is treating the property as a multi-family when it is not.  

There is no grandfathered clauses when it comes to safety, egress and fire codes. These items are a minimum requirement. Plus you wouldn't want to own a property which is a fire hazard. Your liability would be insanely high, especially if something were to happen. The tax issue might be because the property is being assessed for a smaller home (SFH?) but actually a 2-family? Not sure why this is your problem, especially if you are seeking to purchase it. You want to know the tax implications.  

You need to base purchasing the property based on it's legal use, not how the current owner is using it. 

Let me know if you need help. My clients hire me to do this type of research ahead of prospective renovations & additions. 

Hey guys thanks for the advice. The more I hear and look into it the more it makes me want to just walk away. The property is in Binghamton, NY.

@Andrew Cardillo

Different towns and villages require different things. Some areas do inspections every time someone sells or rents, some don't. You must do your research on this area. Are other properties being sold like that or are the changes being made before sale? Have you asked a Realtor, attorney, or title company in the area who deals with every day transactions?

If the deal is a good one regardless, I would move forward with it, keeping in mind that you'd want to these things in the future. If not, renegotiate with the numbers to do these things in mind and see what happens. Don't just walk away, but don't be scared to. 

Hi Andrew,

I had a similar situation last week with a contract I offered on.  I had the city of Bing code inspector come out and they let me know that the property I was interested in had illegal improvements and that's why I wasn't going to be able to get a certification.  Let me know if you'd like to discuss in detail.  Many of the building in the city have had lots of illegal bedrooms added, especially on the third floors...  

Hi Andrew! Are you working with an agent? The Binghamton purchase contract has an optional requirement for C of O, code inspections and zoning compliance. I always warn my buyers of the risks, but overall, I don't often recommend those certificates are required for sale. The reason is that as soon as you get code enforcement involved, it's less about the additional bedroom and more about GFCI outlets and railings and stair heights. If a buyer of mine is in the situation where the numbers are heavily reliant on that extra bedroom, I will write it as a contingency into the contract that the legal use of that bedroom is confirmed during the due diligence period so that, in the worst case, if it's unusable, we are able to offer a different amount or back out if the seller won't play ball.

Feel free to message me if there's any way I can help!

State inspector? Why state?

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