Question about California Civil and San Diego Municipal Code violations

[Mike Hsiao]

I am looking into an off market, 4 unit property in San Diego that was brought to me by a Realtor.  The property is currently completely vacant, and looks like it has been that way for some time.  Looking at tax records, it looks like the property sold to the current owners on April 2022, in which looks like an off market exchange.   So it's strange that this ~ $2M property was sold to this new party, for it only to sit vacant, and un-rehabbed, for 1 year.   So I just googled the current owners name which is a revocable trust, and the first thing that appears is a pending court case with the City of San Diego vs. The current owners + the previous owner right before.   

The Case description is as follows: Plaintiff (City of San Diego) alleges the defendant’s (current owners + the previous owner) use or maintenance of their property has resulted in numerous California Civil and San Diego Municipal Code violations, which constitutes a public nuisance.

The date the case was filed was March 2022, which is just 1 month BEFORE the property was sold to the current owners.

QUESTION: I plan to ask the Realtor if he knows anything about this.   And I also plan on trying to call the San Diego Court to see if they are allowed to disclose details on this.

But does anyone know if this is something to be greatly concerned about?  I don't know if this is an issue with the property not conforming to building code? OR perhaps something much more serious?

Any thoughts on how to properly vet this out during the inspection and contingency period?

Thank you in advance

[Dan H.]

I fear any reply is pure speculation.  I suspect/speculate it is non-trivial to address as letting it sit empty in this market is costly.If it could have been addressed easily and reasonable cost, the new owners likely would have addressed the issues and the units would not be sitting empty.

The standard offer contract in CA includes disclosures.  Nomally the seller has to provide it before the end of due diligence.  In this case, the disclosers regarding the violations and their status should be requested and received as early as possible.  You desire this disclosure to include all communication with regard to the violation(s).

In parallel with this, see if what information you can obtain from the city.  It is also valuable to verify the disclosures.

In the event that you cannot obtain any information regarding the violations, you need to set a price for a worse case scenario.  This would be far below the value if the property had no issues and possibly not much above the land value.

Good luck