Apartment Due Dilligence Turns Up Missing Occupancy Permits

5 Replies

Investors, I’m in the processes of purchasing an apartment building and during my diligence period, I've turned up over half of the tenants do not have occupancy permits on file with the local agency. The previous PM/Owner did not apply for occupancy permits for more than 20 tenants with current leases.

How can I remedy this? Not sure of how to request compensation as I'm not looking to walk away from the deal.

This must be a local regulation? Or a section 8 thing? I'm not familiar with 'occupancy permits for tenants'. Can you explain how that works?

Tony N.  - are you referring to certificates of occupancy? If so these are typically tied to the units, not the tenants and would also be on file at the city to confirm. If they don't have them on file it would have been an issue that would have been addressed at tax time as well.

Justin

yep.  referring to certificates of occupancy.  the city confirmed that they do NOT have them.  therefore, I will have to get them for the tenants that are already in place.

Originally posted by @Tony B.:

Investors, I’m in the processes of purchasing an apartment building and during my diligence period, I've turned up over half of the tenants do not have occupancy permits on file with the local agency. The previous PM/Owner did not apply for occupancy permits for more than 20 tenants with current leases.

How can I remedy this? Not sure of how to request compensation as I'm not looking to walk away from the deal.

I would request a discount. I can't say how much because I don't know how serious it is not to have an occupancy permit in your county. But some sort of discount seems legitimate.

Tony N. 

  Does the city as a matter of course require a occupancy permit for each and every apartment unit or rental... IE they make an inspection or is it just over the counter like getting a permit to do minor work on a property.

C of O in the building context means the property cannot be inhabited until one is gotten. usually means new construction.

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