Illegal electric install found after closing. What would you do?

Illegal electric install found after closing. What would you do?

Investor · Brooklyn, NY · Member since 2014 · 49 posts · 7 votes

I'm a couple months into owning a rental property in NY. Bigger Pockets was a huge getting it nailed down! Now I've got my first post-purchase question.

The home I purchased was a gut renovation flip. To make a long story short: Our tenants reported that the main circuit breaker has been tripping with some frequency, so we brought an electrician out today.

He isolated the problem: romex wiring outside the house going to the central A/C unit. We have to re-run the wiring inside PVC or galvanized pipe, and will need to punch through some walls to make it happen. I'm waiting on an estimate form the electrician, but based on our conversation, I wouldn't be surprised if it comes in around $2Kish.

One thing that the electrician noted is that using Romex for exterior electricity is "illegal" for outdoor electricity in NYC. I don't know the specifics of the code here, but I am very inclined to reach out to the seller and ask them to handle this fix. I'm thinking that I would have some leverage based on the fact that their wiring did not seem to be up to code, and I figured that a friendly reach out might be better at this stage than going super in depth into their legal obligations, etc.

If anyone on the forums has any thoughts on this, I'd love to hear!

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San Francisco, CA · Member since 2014 · 345 posts · 281 votes
11y

Welcome to landlording.  This won't be the last time something like this comes up.  You can get wrapped up in blaming the inspector or the seller or whatever, but you own the place.  Fix it and find something more important to worry about.   It could be worse.  

See this reply in the discussion

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    11y
    Did you have a home inspector ? It will be difficult to get anything back from the homeowner especially if sold as is. If you had a home inspector then potentially you may have a claim against them but at the end of the day you will spend more $ to Pursue it than what it is worth. Also $2k seems like a high price to to that work
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  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    11y

    I don't see any legal obligations on the seller's part.  I doubt your contract specified everything in the house had to be up to current code.  This is what inspections are for, even though they may not discover everything.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    11y

    The electrician is correct - regular "Romex" is not intended for outdoor use. The electrician might be able to locate a splice box close to the exterior wall so that you don't have as many walls to tear up. 

    Did you have an inspection done before buying?

  • Investor · Brooklyn, NY · Member since 2014 · 49 posts · 7 votes
    11y

    Thanks for the insight guys.

    We did have an inspection, and this was not caught in it, unfortunately. 

    I can see how there would be no obligation stemming from our sales contract to handle this. However, common sense tells me that one should be able to hold someone who hires a contractor that does work that breaks legal code accountable. Am I off target here?

  • Flipper/Rehabber · McKinney, TX · Member since 2015 · 381 posts · 72 votes
    11y

    If you know the contractor and when the wiring was done you might be able to do something about it. As far as the seller being responsible for the whole property being up to code that is not the case. When updates are made to a property they are supposed to be inspected and made current on code however if left untouched things are never brought up to code in the event of a sale. 

  • Flipper/Rehabber · Allison Park, PA · Member since 2014 · 10 posts · 2 votes
    11y

    I would double check my inspection contract to see if there is any recourse.  I agree with one comment that it may be more trouble than it's worth.  If you can find who installed it (Like a tag on the heater/AC unit) AND they are reputable, they may correct it OR give you a reduced price to correct the work.  Although a "long shot".... lots of contractors are looking to keep their name in good status.  Even if they wouldn't do it for free they may reduce the price in order to get more of your future business!

    Sometimes you can forge good relationships through adverse conditions.  It is always good to know companies that will fix something right if they messed it up!

    Good Luck!

  • Real Estate Agent · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
    11y

    home inspectors have insurance and he might be liable for the oversight

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    11y

    Just dawned on me, and I'm not an electrician, but......the simple fact that the wire is Romex, as opposed to individual strands in a conduit, as long as they are of adequate size (maybe 10 awg?) would not cause the breaker tripping.

  • Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes
    11y

    You might be able to get something from your home inspector. Emphasis on "might." If the issue was not obvious on visual inspection, and the AC functioned using NOC (normal operating controls) then you don't have a case against the inspector either. And if you do have a case against the inspector, I can virtually guarantee that his contract limited his liability to the inspection fee.

    Your best bet is probably that informal conversation you mentioned, with a flipper hopefully concerned about his reputation.

  • Rental Property Investor · Knoxville, TN · Member since 2011 · 701 posts · 531 votes
    11y
    Originally posted by @Account Closed:

    home inspectors have insurance and he might be liable for the oversight

    Very unlikely. Nobody with a brain would take on the liability of a house they simply did a visual inspection on.

  • Real Estate Agent · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
    11y

    home inspectors do much more then visual inspections,they test circuits,plumbing, hvac,etc and certified inspectors do carry a limited liability insurance and many offer guarntees usually 90 days. They are limited to what they can actually can see and that is why I used the word might @Christopher B.

  • Rental Property Investor · Knoxville, TN · Member since 2011 · 701 posts · 531 votes
    11y
    Originally posted by @Account Closed:

    home inspectors do much more then visual inspections,they test circuits,plumbing, hvac,etc and certified inspectors do carry a limited liability insurance and many offer guarntees usually 90 days. They are limited to what they can actually can see and that is why I used the word might @Christopher B.

    I've never seen a home inspector that would take on any from of liability because they checked polarizations of plugs and flushed a couple of toilets. In TN you need $100 and a high school diploma to be a home inspector though so it's probably different in other areas. In our society I find the probability of a home inspector saying "hey, if you find anything I missed within 90 days call me and we'll cover the costs" to be very unlikely. I'd say the insurance is in case a wall falls down on someone's head. It's just basic business, "we're not responsible for anything and if anything happens you shouldn't have listened to us." Everyone passes the liability baton off to someone else.

    Just my experience

  • San Francisco, CA · Member since 2014 · 345 posts · 281 votes
    11y

    Welcome to landlording.  This won't be the last time something like this comes up.  You can get wrapped up in blaming the inspector or the seller or whatever, but you own the place.  Fix it and find something more important to worry about.   It could be worse.  

  • Contractor · Raleigh, NC · Member since 2014 · 651 posts · 510 votes
    11y

    @Jacob P. "The home I purchased was a gut renovation flip."

    One has to wonder about the quality of the rest of their work.  Was a permit ever pulled for anything?  it sounds amaturish. 

  • Tom MolePro Member
    Investor · Sunland, CA · Member since 2013 · 260 posts · 240 votes
    11y

    @Jacob P., nobody really addressed the scope of this electrical fiasco. Let's face it, if this isn't a big job, then it won't be worth it to take the long shot of going after the seller or the inspector. The fact is, this is the kind of thing that gets missed all the bloody time.

    Having been an electrician in CA I've gotten familiar with the NEC (National Electrical Code) which applies across all states. Romex can be routed through a conduit, just not legally. This means it needs to first stop at a junction box and be spliced to individual wires to be run through a conduit. Usually this is no big deal, so your electrician should not charge much for it. If he wants more than about $200 for the job, including parts, you should get a second opinion.

    To the other point you brought up, Romex is NOT the reason your breaker is tripping. More likely your breaker is overloaded. AC units draw a bunch of current, especially when they start up. If you really mean the "main" breaker is tripping, then you really do have a problem. You may need a panel upgrade and that will cost at least $2,000. 

    If however its a branch circuit that's tripping, then you may be able to change out the breaker for one with a higher capacity. You better check with the electrician first though. You can't "just change" the breaker safely. The wires have to be able to support the current that flows through the breaker. This is serious business. Spend the extra money to get a real electrician, not a handyman. I mean licensed and bonded with a good references. 

    Get a qualified estimate and post the details. I'll be happy to let you know if this guy is genuine or full of poop. Send me a PM if you would like me to help you drill down on this issue.

    When all is said and done, you'll likely find that legal recourse will only help so much. The original law, caveat emptor, is your best advice. Sometimes, despite your best efforts, these things pop up. You can make system fool proof, but you can't make damned fool proof.

  • Investor · Brooklyn, NY · Member since 2014 · 49 posts · 7 votes
    11y

    Got it guys. All of this feedback is super helpful.

    The discussion on the inspector is very interesting. The circuits were not tripping when the home was inspected, and I do think it would be a very long shot to pursue anything with them.

    I am certain that this wiring was done during the flip, so the work was performed by a contractor hired by the seller.

    @Tom Mole Thank you so much for the insight. Your assessment also lines up a bit with what @Wayne Brooks mentioned. I'm not an expert, but from my observations/conversations with the electrician, I believe that the issue is that the Romex has been exposed to the elements and has degraded. I will definitely take you up, Tom, on the offer to send the estimate your way, and would love to hear your thoughts on it.

    For what it's worth, the electrician who assessed the issue (and will be providing the estimate...)  is licensed and comes very highly recommended.

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    11y

    @Jacob P. You do not really have recourse here. Part of buying real estate is buying it with all the flaws that it has.  Home inspections are very generalized and not specific.  Home inspectors in most states can not even take off an outlet cover. Pursuing recourse will likely just waste your time and money. You will be more frustrated in the and nothing is going to change. Also this is an example of the problem with buying rehabbed/flipped homes if the flipper in question does not have a track record.  I do not buy flipped homes, as most of the ones I come across have significant issues with the quality of the work.

    The cost of the fix is likely to be less than $500.  However I do not feel that the wire being romex is even what is causing you the problem.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    11y

    Good point regarding permits. Check if there was a permit obtained for the install of the AC equipment. If not, well there's your simple explanation - unpermitted work performed by those who either don't know better or who prefer to cut corners to save a few cents. If there was a permit, then you want to confirm that all municipal code inspections on that permit passed. In my area, electrical inspections typically get outsourced to third party inspectors that specialize in electrical inspections. 

    My guess is there will not be a permit. 

  • Real Estate Investor · Washington, DC · Member since 2014 · 236 posts · 328 votes
    11y

    "To the other point you brought up, Romex is NOT the reason your breaker is tripping. More likely your breaker is overloaded. AC units draw a bunch of current, especially when they start up. If you really mean the "main" breaker is tripping, then you really do have a problem. You may need a panel upgrade and that will cost at least $2,000. "

    Yes, this was my thought too. Are you sure the price quoted was for running wire and not a "heavy up" to upgrade your panel?

    As mentioned, Romex outside won't cause the breaker to trip. It's not up to code because outside stuff is supposed to be in that round metal tubing (forgot what it's called) so that it doesn't get exposed to the elements or eaten by mice.

    If the breaker is tripping, the HVAC is on a line with other things (either because the installed didn't know what they were doing, or because the panel box had no room for it).

    Unless the homeowner installed it himself, s/he may not have know that it was done incorrectly. It's definitely something the inspector should have spotted though. good luck

  • Investor · Brooklyn, NY · Member since 2014 · 49 posts · 7 votes
    11y

    Thanks guys.

    For what it's worth the seller did pull permits for all of their work.

    The Romex line goes directly from the junction box into the ground (and at some point enters the house in the basement). Maybe I just have low expectations for inspectors, but I don't really fault them for missing this item.

    When the electrician was here he identified and exposed the romex by removing some of the dirt around it. We saw a small amount of smoke coming from where he unearthed it, and for a moment I saw a small bright point of bright light (before the electrician ran in to shut of the breaker). Several in the thread have pointed out that they didn't think the romex alone could be causing the problem, but my (admittedly uneducated) guess of what is happening is that the line has already degraded and is exposed to the earth, and occasional moisture which is causing the issues.

    I contacted the sellers construction manager today (he did some other work on our punch list and was an all around good guy), and waiting to hear back from them. In the meantime the estimate came back from the electrician at $1400: Job description "locate and cut Romex cable in the basement that feeds the A.C. units underground. Install a junction box in the basement and re-feed the two A.C. condensers in the backyard. Underground Romex will be eliminated. Proposal doesn't include painting or patching. Repair of drywall will be done by others"

    Based on what I've read in previous posts, I'm considering getting a 2nd estimate, but am also hoping that we hear back with good news form the construction manager tomorrow.

    I will keep you posted with updates. Thanks again everyone for the insight. It's all been extremely helpful

  • Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
    11y

    Call your contractor's state board, connect with the consumer department, seems like a contractor problem to me. Check with the building department and ask why the electrical inspector passed the "illegal" construction. I have not been in that experience but I'm just throwing options your way on the contractor's point of view.

  • Member since 2023 · 5 posts · 0 votes
    2y

    Hi all

    I am having almost the same situation but a bigger issue. I bought a house from an "investor" /slumlord. After I purchased the home following an inspection I was told from the sellers tenants about mold and water damage, structural damage etc that the seller knew about and tried to cover it up and avoided disclosing at the sale. In addition electrical work was done. NEW meter box can and meter and a panel box were all put in prior to the sale WIThOUT the proper permits. Then it's gets better. I called the local power company at the start of me moving into the house and like normal asked them to start service. The request was showing pending in their system for 7 months. I called and inquired and only until Aug did they finally send me a bill. They claimed the meter wasn't reading. Mind you the seller replaced the meter can sometime nearly a year ago aug.  He won't say who did the work but brags about the repair and his cost. Now the utility company is digging into this as I filed a complaint with the utilities commission regarding the serval thousand dollar bill I received. The utility company is struggling to tell me how one of their meters was installed in a new can without their recollection or how the power was even turned on even prior to the sale of the house without documentation , a work order or an inspection. If the seller somehow got either an FPL worker or got an FPL meter to be installed by a random person and turned on the power to the house without the utility companies knowledge...where does it go from here? I am I responsible for this illegal activity or should the utility be investigating the seller for the situation? 

    the last known info the utility company has record of is that the old meter was removed and electric was shut off. A note was left that a new meter can needed to be installed. They have no record of it being turned back on by them that they can find thus far. What should I do now? 

  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    2y

    What did the seller say on the disclosures? That would go a long way in regards to determing what to do next

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y

    Welcome to real estate. Suck it up, get it fixed, because you have no recourse, neither from the seller or the inspector. Home inspectors are not code inspectors.

    All renovations have post closing issues, because no one has yet lived there to find the problems that exist. 

  • Member since 2023 · 5 posts · 0 votes
    2y

    The seller made up a document that said he did not have to disclose anything. Instead of the normal disclosure paperwork in every transaction, he somehow got away with his broker creating a I don't have to disclose anything document.  However he also signed the regular standard contract. 10j which says "SELLER DISCLOSURE: Seller knows of no facts materially affecting the value of the Real Property which are
    239 not readily observable and which have not been disclosed to Buyer. Except as provided for in the preceding
    240 sentence, Seller extends and intends no warranty and makes no representation of any type, either express or
    241 implied, as to the physical condition or history of the Property. Except as otherwise disclosed in writing Seller
    242 has received no written or verbal notice from any governmental entity or agency as to a currently uncorrected
    243 building, environmental or safety code violation." And he did know. The renters showed me two years of pictures and texts between he and them. As well as his own broker text me and said they did not pull permits and also stated the seller put in the meter box. The seller covered over the mold with fresh paint. He did not disclose subfloors were falling through and that his tenant infact fell through. I've already got an attorney dealing with that but now the utility issue has come into play. The utility company's last known record of this address was a workorder where they came out removed old Meter from box and shut electric off. They noted and left a notice that new can would need to be installed. From that date they have no record of electric being turned on nor of them installing a new meter. The seller infact did the work , paid some mysterious person to build a new can. Pulled no permit , thus no inspection and then somehow got the electric back on without the utility company aware of it. So now what? Shouldn't the utilities commission and or the utility go after him for what taken place? Or is this just a turn a blind eye by the powers that be and make me deal with it all? 

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