Another update.
I backed out of the deal.
As soon as FNMA accepted by offer, I had to commit to EMD and sign their REO addendum.
They asked for a 90 day deed restriction, which I was OK with.
The property is probably worth 165K when it's rent ready, but right now it's not.
My accepted offer was 131K, with an estimated 20K to correct the violations - well the violations I know of - illegal fence, illegal staircase, illegal pond, two illegal exterior structures (gazebo style steam room and weight room), and illegal driveway and decking, plus some interior violations on a master bathroom plumbing.
Oh, and a 345K city lien from years of daily fine.
So when the clock started ticking I began to do my "thorough due diligence".
Had my attorney reviewed the contract and looked into the lien issue.
Now, the city, as a matter of policy, WILL reduce the lien down by 90% once the new owner makes the corrections and clear all the violations. It is not a matter of IF, they will. I spoke to the director of code compliance as well as zoning, and my attorney also verified independently...here is an article.
Hallandale city managers erased millions in code violation fines with little oversight
The only risk may be if this mess drags on, and they change the policy, then it may be subjected to commission hearing.
After checking with their building department, they also told me if I commit to clear all violations, they will give me a nine month time frame to clear the issue and halt the daily fine while I resolve things so it will not pile up further. That helps.
Now on to the inspection. Currently property has no water and no electric. LA says they can turn on electric, but water cannot be activated due to non-payment and there is a fine. Around $500. I asked to turn water on. LA says asset manager is aware and needs to sign off to pay off the owed amount and reactivate the account, but somehow asset manager is taking it's time. I had schedule the inspection for day 8 of the 10 day due diligence period, so that day 9 I will receive the report and can back out on day 10. Well on day 8 still no water, and I am not comfortable with not being able to turn on water at all. STRIKE ONE.
Next I started hitting in all directions trying to get a handle on all the violations - it has a long list, with a bunch of vague descriptions. For example, it says "REMOVE ILLEGAL PLUMBING MODIFICATIONS" but didn't say where. The two gazebos that had to be demolished, one of them had a hot tub and toilet in it, not sure if it refers to that or something in the main house.
Unfortunately, the time for seeking any sort of variance has passed. The gazebos were erected within the setbacks and had to be removed.
Driveway had to be torn out because it reduced the city's required residential 40% minimum landscaped areas.
However, a new mystery. While reviewing the violation folder of this property which is now over an inch thick, one of the officers in charge said he remembered that property and the "rear addition was illegal". WOW, that throws a new monkey wrench into the picture. No where in the file says anything about a rear "ADDITION". They couldn't find any references either and had no record of any changes, permitted or unpermitted. What is really messed up is the city doesn't keep records over 10 years! They destroy it. They don't archive it, microfiche it, scan it...it's GONE. So when I asked them what's illegal they said it needs to be returned to the original, permitted design and layout, I asked them what was the original design and layout they couldn't tell me.
Code compliance didn't have anything. No records, no original plans. Only vague memory of someone who remembers something.
Original inspector for that case is no longer with the city.
No one else remembers.
I went to their permits section and pulled their permits, but nothing turned up except a scan of old survey which is no longer legible for the most part.
Then I went to the property appraiser's office and asked if they have records of the property's square footage record over the years. They have something.
Original in 1960, the square footage was 1767 SF.
Then in 1974, they recorded a new back porch - added legally (they think) which is 17'x13', an added 221 SF. The new total SF would have been 1767 + 221 = 1988 SF.
The property appraiser's legal SF now is 1987 SF, seems like a good match - to me anyways. So they legally added a back porch.
However, the actual building now has a back "room" which is now a functional master bathroom - so they enclosed the porch, and may have extended the porch, probably raised the floor elevation to match plus a bunch of other things. Now all this is new, and I have no idea what it would cost to "return it to a porch" or what the city wants.
Bear in mind this new finding was done by me at the county. City doesn't know yet. They still don't know what the legal layout is supposed to be and no one could tell me that. I supposed I could argue that the back addition should be legalized since no one could tell me what it looked like before and there is no explicit violations cited in that two inch thick case file, but that's a huge risk. STRIKE TWO.
With those two issues and my 10 day deadline bearing down, I decided to pass on the deal.
If I want the house there has to be some price adjustment to reflect the new risks.
I wonder if FNMA is open to some sort of tabulated cost analysis to help them make a more informed decision, I doubt it. LA said it is highly unlikely they will take another price reduction. So a lot of energy went into this one and I turned the city building department upside down, talking to zoning, engineering, code enforcement, permits, most of them got to know me now and hope I would buy the property and fix it up LOL.