Who is responsible for permits/codes
Architects, builders, GCs, investors, and anyone else who knows anything about applying for permits on a late scale renovation I need your help.
OK so the title is a bit misleading since I am well aware, at least I think I am of who is responsible for pulling permits and following building codes for a project, BUT I'm in a tough spot and would love the wide ranging, and excellent advice from the community. I have more than one question, so I think the best way to approach this is to lay out the situation, and ask everyone what they would do in my position. I'm also looking for advice on how to avoid this situation in the future. There are no mistakes, only learning opportunist. Nor have I lost any money, yet, I am just paying for an education. So with that said....
I'm in the middle of our largest renovation yet and we are stuck at a crossroads with the township. The deal is structured as follows. I'm an agent, investor, property manager and project manager. For this deal, I am bringing my project management skills, managing the process, I brought all parties to the table, I am going to list the house when it is time, and I analyzed the comps to make sure there is profit to made on the back end of this thing, and I'm bringing half the capital for repairs, the owner/seller is bringing the other half. We are splitting the profit in the end. I partnered with the owner of the home. He has no experience flipping, but sees the potential of his property being fixed up. We brought on a GC to handle the construction and it's fairy large job. The GC is also sharing in the profits as well, rather than marking up materials and labor or a flat percentage of the job.
The current structure is 1050 sq ft and needs a full rehab. Homes in the area are selling for 200-225$ a sq ft, and the size of the home makes it pretty undesirable so we decided to hire an architect to come up with plans for a second story addition over the exsisting house. This is where it gets tricky. Nearly every township in my area has different processes, guidelines, requirements, permits and codes. We tried to follow a plan that would not require any type of variance or "approval" from the township other than normals permits and inspections. The builder/GC is experienced, but not in this particular township. He made a few assumptions when working with the architect to come up with the plans and when everything was submitted for review, the township kicked it back and said we need a variance due to the current setback of the house from the road, adding the addition isn't grandfather in. Normally this wouldn't be a huge issue, but we started the process over 4 months ago. When we started, the builder assumed it would take a few weeks to get plans, a few more to get permits, and we would be done within another 6-8 weeks. So about 3 months start to finish. 4 months in, we need to wait Another months to attend a township hearing for the variance regarding the setback. We also have a list of about 5 other items we need to get for the township before they will even review our building application.
The owner is not happy. We expected to sell in the "summer selling season" but it's not going to happen. He also brought us on because of our experience flipping houses, yet the back and fourth with the township is making it appear that myself and the builder don't have the project under control, and we having even started building yet. For the sake of round numbers, the house is worth $125k, which the seller will be paid at settlement. Renovation budget is $175k. Comps are selling for $400-$450k in under 7 days. In fact there were ZERO homes availabile in that price range when we started, because everyone that is listed sellers immediately.
So now that you know the story.....
Where did we go wrong with the township? Should I have met with them ahead of time to tell them what we were thinking and what we would need?
Here's an example of being penny smart and pound foolish. We decided to go with the cheaper, out of town architect, rather than the twice as expensive, but in town architect who would have had a better understanding of what the township required.
Is it on the architect, the GC, or myself as the project manager and realtor to get ahead of the building codes and make sure we will be able to complete the plans we were working on? The GC has been in the township building on 4 occasions speaking with the office members, gate keepers, code inspectors to prepare the applications. Each time they would send him inn his way with more information, but each time they would leave something out only to be discovered the next time he tried to submit. There has to be a better way.
How do I convince the seller to hang on for the ride? All the out of pocket costs up until this point and until building are on myself, so he's just losing "time" "patience" and "confidence" that we can actually complete the job.
Part of me wants to slap some paint on the walls and throw a kitchen and bath into a tiny little 3 bedroom house in a great neighbor and move on with a few thousand dollar profit at best. The other wants to wade through the BS so we can reap the benefits of the full blown development.
This game isn't easy. And every project is different. My motto has been "if it were easy, the rewards wouldn't be so great, and everyone and their sister would be doing it" so the setbacks are to be expected to a certain extent. But the recent developments are going to mean more time And more money just to get through the planning stage, with many unknowns to follow as we execute on a $175k renovation.
Advice, input and experiences would be greatly appreciated.