I'm working on selling my first flip in Cincinnati, it's under contract and the buyer checks and sees that we didn't pull any permits. The GC I hired said he was going to take care of the needed permits, it was part of the bid. Well obviously he didn't.
Now the buyer wants us to pull permits so my GC says he'll go back and pull them for the electrical and HVAC. He keeps telling me he's working on it and working on it, which is what I'm telling the other real estate agent. Well finally the other agent calls the city and the city tells him there were no permits pulled, now or in the past for this house. Then, the other agent gives the building inspector my name and number, so I get a phone call from the building inspector. I play dumb and say my contractor was supposed to pull permits but apparently didn't.
My question is, what are my options and what could happen? Now that the work is completely done, can the inspector come back in and say everything needs to be permitted and even make me open up walls to see new electrical and duct runs? This is my first rehab and it's been a nightmare, but one hell of a learning experience.
Depends on the inspector. They could make you open up walls so they can see the work. some areas will let you pay a small fine and buy the permits if they can still inspect things. Each situation is different. Be VERY cooperative and very humble with the bureaucrats. Consider this part of the cost of tuition in flipping school, you will know better next time.
@Kyle Burnett Are you dealing with the City of Cincinnati, or Hamilton County?
@Kyle Burnett is your area one where the town will allow you to pull the permit? Have you reached out to the contractor since the town notified you that he has not even applied for permit? What has he said?
At this point I would be calling him, emailing him and visiting him as soon as possible, as much as possible until it is resolved. If you have a contract where he was required to pull the permit, then hound him.
I would also do some homework and ask the town what their expectation is. Explain your difficulties with the GC and see what they may advise. They very well may ask you to open up walls. I assume you did in wall electrical, plumbing, etc?
I had a hiccup on a job after the house went under contract. My electrician called for inspection and couldn't be there (final inspection). The inspectors first comments were... "you never had a rough inspection". He went on and on about not knowing what's behind the walls, question a 4-gang switch box, and making many comments about how he could force me to rip everything apart to view it all. In the end my electrician and he spoke, set up a meeting and some test to confirm the work had no shorts (no idea exactly what this test was). The house passed and the buyer was completely unaware of this.
@Christina Carey This is with the city of Norwood.
@Brian Pulaski I'm pretty sure owners can pull their own permits, although with it being in and LLC, I'm not sure if an GC license is required. I guess I'll find that out soon.
I have reached out to my GC but he won't return my phone calls.
We did almost all new electrical and HVAC runs. Most of the plumbing was already there.
@Kyle Burnett I would do both, see about permits through the LLC and at the same time do whatever it takes to reach the GC. I would be at his office/home speaking with him in a situation like this.
@Kyle Burnett Wow, what an oversight. I'd complain to your state board, and if there is a "contractor's bond" imposed in your state, that is your best recourse, you need papers papers, papers. Showing that he is REQUIRED to pull permit on the contract seals the deal, in case of trouble, the city will send a citation that they need to inspect this and that, that will be your proof that he did not pull permit. So that's the open shut. To use the bonds, state will require best effort to reach the contractor, emails, text messages are best form of evidence, after that, you can hire someone to pull permits, open walls, etc, at the expense of the contractor's bond (not you). For owner builder, most likely it is no, the city will say, how can an LLC live in your house, an LLC is not a person who can be physically live there, that's the premise for most cities, or at least to all the cities i know of.
As @Jim Lee and @Eric Burgh correctly said. It will all depend on the inspector, how you speak with him/her and be humble. The inspector may just have mercy on your soul, may have to pay a small fine and problem solved. Don't freak out or keep thinking about it, your just wasting energy. Keep positive and hope for the best. I hope it all works out for you @Kyle Burnett and congrats on nearing the end of your first flip. You accomplished what many others want to do, but never take the first step.
@Kyle Burnett Did you send the real estate agent a thank you note for throwing you under the bus?
He said the buyer looked it up himself
@Kyle Burnett , I am a local investor and do mostly buy and hold but as part of our business model we do have to rehab pptys. We are in over half of the 52 named neighborhoods in Cincy so have experience with both City (there is no County inspector) and the various neighborhoods (Norwood here). IMHO, you may have to go back and open some walls to show the work. Norwood is tough but fair, as are many cities. Don't ever try to shortcut and sweet talk - I know investors who have been sued later - do the work and do it right. Sorry for the tough news. How did you find the contractor? Did you periodically review the work with him (visiting on sight?). Happy to talk with you about several ones we use and please know that there are folks in the business (including contractors) who will work with you to help educate you. You are not in this alone. PM me is interested. Can walk you through a 27 unit apartment complex repositioning we are doing in Cincy and you can 1) get scared at how little you know or 2) get excited about how much you have ahead of you.
@Chris Purcell I saw where the buyer looked up the information but one realtor called the city and asked about it and the other agent called and gave the property owner's name and address. Instead of the buyer merely moving on the agents stirred up a hornet's nest down at city hall.
@Kyle Burnett Just like everyone else said in the forum. Depends on the inspector, just make sure to play stupid and be as nice as possible. He can literally make you rip off all the sheetrock and that would basically be the death of you because then he can make a big deal about ANYTHING. This is EXACTLY why I manage my own jobs and I have my own guys and subs. This is the kind of ******** you have to deal with if you hire a GC. This is a nightmare and I hope you learned that it is always better to get involved yourself because then you have a lot less headache.
Just talk to the town as much as possible, be nice and play stupid. Always work, oh and make sure to mention that this your first flip and that this is all a learning experience. I have a HUGE advantage compared to everyone because I can play stupid all the time because I'm 19. I hate doing it but when I have to, I have to. Just take this as a learning experience, always look at the positives because the negatives will eat you alive.
Who was the GC?
How quickly did the home sell? Any chance for you to opt out of the contract and put it back on the market and maybe the next buyer won't care about permits as much?
@Anderson Morgan this sounds like bad information. The town is now aware of the lack of permits. Do you think they will simply forget that? You would be lucky if they did.
@Brian Pulaski I am aware the city knows. They may fine him for not obtaining permits. I'm not sure if they will make him open walls to obtain permits or not. If the buyer is demanding permits I was thinking he could opt out of contract and put it back on the market and hope for another quick offer. May have to disclose why first sale did not go through to any new buyers though.
I'm going through the same situation currently but worse. My contractor didnt do the work correctly, closed the walls up, didnt pull permits, took 5 months to do a ****** job that should have taken 3 months and still didnt finish, walked off with a check, and what makes it worse were arent even 60% compete. The best thing to do is find a inspector that will pull the permits or loan officer with connections to pull permits.
Are you sure the contractor you hired is even a licensed contractor? If he is then great, you can give his name and license number to the inspector and he can do whatever is necessary to get the work cleared up and permitted. If not then this is going to be a big headache on you.
This is also a lesson for you, you need to learn to stay on top of things. As an investor you need to verify that what is being done is what you paid for. If the buyer can look up the permits then why didn't you? Here I can see everything online, permits, inspection times, inspector's comments, etc. I don't issue final payments until I verify that the permits have been closed. I also verify that the contractors have pulled the permits when they are starting the work because as the owner I am going to be the one with the issue if the property gets nailed for work without a permit.
At this point you're going to have to pull after the fact permits. I don't know about your city but those are generally far more expensive and if some of the work needed to be inspected before being closed up then it will have to be opened back up if the inspector needs it opened (things plumbing or electrical). HVAC is easy enough to inspect after the fact. Electrical it depends on what work you did. If it's just a service upgrade or panel changeout that's easy but if you rewired the entire house you could be in for a big headache.