bought a house but found the construction permit is missing
Hi all,
I bought a house in Dec 2021. The house is a new build and close to Dallas downtown. Now I am trying to install solar panels on the roof and find out that the construction permit for the house wasn't completed. The city of Dallas notified me that the builder/seller pulled the construction permit in July 2021 but never completed it. Now the permit expired due to inactivity and based on their record, there is basically nothing built on the lot where my house sits. I contacted the seller but he simple doesn't respond. I contacted this seller last year regarding the house quality issue and he simply denied any responsibility although the house was still under one year warranty. What should I do in this situation? Should I go to the lawsuit route?
thanks,
Yong
Shalom Yong
Unfortunately, you may have to. In the meant time obviously there's a property built on the land you now own, since you seem to run into dead-ends while trying to get things in order, you can hire a building designer or architectural designer to give you a house plan or blueprint, for you to submit to the City of Dallas, along with your purchase contract of the property. often time you may want to contact the Title company you closed with for most of your information.
Happy Hunting, Yedidyah
Thank you, @Vernon Watts. I actually want to rescind the contract. I don't want to deal with a property that is built illegally. Not sure if I can win in this case.
How the heck did this get through the title company? All-Cash sale? The lack of building permits should have been flagged by the title search. If you go in the county website do you see your property listed along with the home? You likely have recourse through the title company and the title insurance. I would start there. Seller sounds like a dead-beat.
The other option is to go to the city and request a copy of the old building permit. You might get lucky and find out the final inspection wasn't done or it was not properly recorded. You might have the option to pick up on the old building permit and finish final inspections. The more information you have the better you'll be able to figure out the best path forward.
Hey @Yong Lai - which title company and attorney was used? Was it someone from your own network or through the builder's recommendation of vendors?
Asking because title companies are supposed to verify all this information before they allow a closing... unless you bought the house without a mortgage? If that's not the case, the bank should have ordered the title search for this property.
Very strange, but I agree with @Vernon Watts - next best steps would be to contact an architect and perhaps hire an independent title company again to verify all documentation for this sale & new build.
Good luck and sorry to hear about your situation!
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Hi @Pete Harper, exactly, I called the title company but the person who handled the case wasn't available at time. Left a voice mail and am waiting for hearing back from them. It is a conventional mortgage, not all-cash. I called the city already, and the person who handled the permit pulled by the seller told me that the permit expired due to inactivity so basically there is not built on the lot based on his record.
Hi @Mohammed Rahman, the title company is called National Title, I think it is through the builder/seller's vendors. The house was built on a lot where the old house was demolished. Not sure if that is why the bank didn't have problem with title search? Maybe they are using the old house's permit?
Right now I am just looking for lawyers to sue the seller, I am hoping to rescind the contract.
I would start with the title company. Situations like this are exactly why you buy title insurance. Besides they have deeper pockets. Title company will go after the seller if he did anything wrong.
Don't give up on the city so easily. Keep calling until you get a live person. If they will not help ask to talk to supervisor. The city will have a copy of the original permit and what inspections have been done. Again it might be something as simple as someone forgot to file a final inspection. The guy on the phone might just be trying to cover their mistake.
Since you have a loan you can also get your bank involved. The bank has better lawyers and deeper pockets than you do. The bank has a vested interest in proving you and they having clear title.
Don't underestimate the cost of a lawyer. Most charge about $400/hr. Adds up quickly. Best to let the big dogs take the lead.
Unless there was a notice filed in public records regarding code violation and/or enforcement, this isn't going to be covered by title insurance IMO. This is also something the buyer arguably should have discovered during due diligence so that may complicate things.
Rescission is a fairly severe remedy... I would think monetary damages (cost of re-opening permits, having inspected, etc.) would be a more likely result than unwinding the deal.
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#2 Real Estate Agent Contributor
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WOW....this is unfortunate....and a mess.
I think your first step is to GO, not CALL the building department and see what you can do to rectify the situation. You need that CO to also legally rent the house. Be nice...you want them to work with you. Just understand Dallas is overwhelmed right now. It may not be easy dealing with them and may involve talking with more than one person and more than one trip.
You may want to go ahead and hire an attorney like Matthew Aycock to go after these rascals. Other great attorneys here in DFW is Chris Sullivan, Chase Garrett, or Edith Guzman.
My guess is they are a small and nobody builder that has no money and no assets.....total guess, but rescinding the sale is probably not an option if they have no money. Maybe even suing them is not really an option. Do some research and see if they are still around, still building more homes, if the LLC they sold out of has more assets.
#2....don't put solar panels on any house in DFW.....unless you pay cash for them. No financing, no deals, no payback deals. Solar panels are deal killers here. This builder may have just saved you a ton of headaches and money.
Good to check with title, but I don't think they normally check for open permits or CO. Probably should, but I don't think this is normal in their course of business. This is kind of black hole. I don't think anyone checks. Big builders...they do check and make sure they have their CO normally and are often rushing to get it before closing. The small one off guys...I wouldn't trust them....maybe they get it...maybe they don't.
Hi @Bruce Lynn, thanks for your advice, can you send me the contact info of these attorneys?
Quote from @Tom Gimer:
Unless there was a notice filed in public records regarding code violation and/or enforcement, this isn't going to be covered by title insurance IMO. This is also something the buyer arguably should have discovered during due diligence so that may complicate things.
Rescission is a fairly severe remedy... I would think monetary damages (cost of re-opening permits, having inspected, etc.) would be a more likely result than unwinding the deal.
Unless of course it's an enhanced policy.
Quote from @Peter Walther:
Quote from @Tom Gimer:
Unless there was a notice filed in public records regarding code violation and/or enforcement, this isn't going to be covered by title insurance IMO. This is also something the buyer arguably should have discovered during due diligence so that may complicate things.
Rescission is a fairly severe remedy... I would think monetary damages (cost of re-opening permits, having inspected, etc.) would be a more likely result than unwinding the deal.
Unless of course it's an enhanced policy.
Good point... but that's not part of the fact pattern. Either way the insurer is not going to unwind the deal -- they would be paying out actual loss with a max. of $25k (I believe).
Quote from @Tom Gimer:
Quote from @Peter Walther:
Quote from @Tom Gimer:
Unless there was a notice filed in public records regarding code violation and/or enforcement, this isn't going to be covered by title insurance IMO. This is also something the buyer arguably should have discovered during due diligence so that may complicate things.
Rescission is a fairly severe remedy... I would think monetary damages (cost of re-opening permits, having inspected, etc.) would be a more likely result than unwinding the deal.
Unless of course it's an enhanced policy.
Good point... but that's not part of the fact pattern. Either way the insurer is not going to unwind the deal -- they would be paying out actual loss with a max. of $25k (I believe).
But at least you'd get the underwriter involved with figuring out a possible solution.
As mentioned above Title doesn't necessarily deal in any of these 'permit' issues as they are not 'on title'. Permits are in the building records of the local municipality, and do not get recorded (broad brush strokes as there are times where things may be on title). Also this is not an uncommon issue, often permits expire and final inspections are missed or incompletely closed out. Your recourse is directly with the building dept to determine how they locally handle the process. Some municipalities issue new 'Final only' inspection permits, some can 'reactivate' a permit and then complete the necessary inspections. Or if the issue is specific to say plumbing or electrical, they may issue a specialty trade permit (e.g. Electrical permit for final inspections) and then complete the inspection on that permit.
It's not really a big issue in most cases, it's just a paperwork process that the municipality has so they can keep track of what occurred and how it was eventually resolved.
Yeah, I talked to my lender and they don't know how to handle such thing. I also talked to a couple of lawyers, the expected lawyer fee way over weigh the cost to fix the permit issue myself. I suppose that is what I am going to do.
@Yong Lai
Unless the city is willing to severely bend its rules on issuing a CO on a house that isnt properly inspected and has no permit then there is no "fixing the permit issue". As an architect, I've never seen a city do this. I've seen several "after-the-fact" permits get done but it is a very costly thing to do with lots of destructive inspections that are required.
Think of it this way. The city still has to do all its inspections, and depending on how far along in the construction process the inspection stopped is where you will have to start from. So if they stopped at framing then you have to go through all the inspection that come after that, electrical, plumbing, HVAC, etc. And if you can see those things right now, since you are living in it, you would have to remove all the drywall so the inspector can see those things. If they just didn't do the last couple things on the final inspection check list to get CO then you are in a much better situation.
You need to go to the city and find out exactly when the last inspection was recorded. Then you can determine what would need to be done.
My guess is the you will need to get an attorney and you will end up suing your lender, the title company, and the builder. Between all three of those you should be able to get a payout of some kind. BUT that still leaves you with an unpermitted building that the city COULD require you to demolish. Thats the catcher here...is that unless you can work with the city to give you a CO then no matter what pay out you get you could still loose the house. Maybe...just depends on how the city will handle it...especially now that its on their radar. It will also prevent you from selling it and could possibly make it so your insurance drops you too.
My suggestions is go to the city first and see what you can work out with them. Then weight your options with an attorney. Make sure its an attorney that is experience in construction law suites.
Yes, @Nik Moushon, that's what I am going to do first thing next Tuesday. I suspect nothing was inspected, so lawsuit probably will be back on the table again. Thanks!
Quote from @Nik Moushon:
@Yong Lai
Unless the city is willing to severely bend its rules on issuing a CO on a house that isnt properly inspected and has no permit then there is no "fixing the permit issue". As an architect, I've never seen a city do this. I've seen several "after-the-fact" permits get done but it is a very costly thing to do with lots of destructive inspections that are required.
Think of it this way. The city still has to do all its inspections, and depending on how far along in the construction process the inspection stopped is where you will have to start from. So if they stopped at framing then you have to go through all the inspection that come after that, electrical, plumbing, HVAC, etc. And if you can see those things right now, since you are living in it, you would have to remove all the drywall so the inspector can see those things. If they just didn't do the last couple things on the final inspection check list to get CO then you are in a much better situation.
You need to go to the city and find out exactly when the last inspection was recorded. Then you can determine what would need to be done.
My guess is the you will need to get an attorney and you will end up suing your lender, the title company, and the builder. Between all three of those you should be able to get a payout of some kind. BUT that still leaves you with an unpermitted building that the city COULD require you to demolish. Thats the catcher here...is that unless you can work with the city to give you a CO then no matter what pay out you get you could still loose the house. Maybe...just depends on how the city will handle it...especially now that its on their radar. It will also prevent you from selling it and could possibly make it so your insurance drops you too.
My suggestions is go to the city first and see what you can work out with them. Then weight your options with an attorney. Make sure its an attorney that is experience in construction law suites.
As Tom Gimer previously wrote, unless there is a notice of the violation recorded in the public records (or the OP received an extended form title policy) it's unlikely there would be policy coverage, but it never hurts to file a claim.
Quote from @Peter Walther:As Tom Gimer previously wrote, unless there is a notice of the violation recorded in the public records (or the OP received an extended form title policy) it's unlikely there would be policy coverage, but it never hurts to file a claim.
I don't agree with Tom's statement. This isn't an existing home so there is no way for anyone to file a code violation in the way you have mentioned. A building in construction is FULL of code violations. Thats why they are suppose to call out the city inspector. The city should have record of all inspection reports.
From my experience in the past, and this does vary by state, but for NEW CONSTRUCTION, proof of CO is usually required by the lender and I've seen it requested by the title company too before. My lender requested proof of CO to roll over my construction loan to the full loan for my duplex I built.
BTW, the first rule in a law suite is to sue as many people as possible. This is just a trial technique. Now, the question is do they fight it or just put it out to their respective insurance company? Thats what I was getting at. Not that he would get a full pay out from each.
Quote from @Nik Moushon:
Quote from @Peter Walther:As Tom Gimer previously wrote, unless there is a notice of the violation recorded in the public records (or the OP received an extended form title policy) it's unlikely there would be policy coverage, but it never hurts to file a claim.
I don't agree with Tom's statement. This isn't an existing home so there is no way for anyone to file a code violation in the way you have mentioned. A building in construction is FULL of code violations. Thats why they are suppose to call out the city inspector. The city should have record of all inspection reports.
From my experience in the past, and this does vary by state, but for NEW CONSTRUCTION, proof of CO is usually required by the lender and I've seen it requested by the title company too before. My lender requested proof of CO to roll over my construction loan to the full loan for my duplex I built.
BTW, the first rule in a law suite is to sue as many people as possible. This is just a trial technique. Now, the question is do they fight it or just put it out to their respective insurance company? Thats what I was getting at. Not that he would get a full pay out from each.
Nik -- Peter handled title claims for national title insurers for 2-3 decades. The policy terms are clear I believe this concerns coverage #5.
Sounds like a breach by seller and perhaps a mistake by lender but beyond the scope of title.
I wonder if I can sue the seller's agent for putting illegally built house on MLS?
Quote from @Nik Moushon:
Quote from @Peter Walther:As Tom Gimer previously wrote, unless there is a notice of the violation recorded in the public records (or the OP received an extended form title policy) it's unlikely there would be policy coverage, but it never hurts to file a claim.
I don't agree with Tom's statement. This isn't an existing home so there is no way for anyone to file a code violation in the way you have mentioned. A building in construction is FULL of code violations. Thats why they are suppose to call out the city inspector. The city should have record of all inspection reports.
From my experience in the past, and this does vary by state, but for NEW CONSTRUCTION, proof of CO is usually required by the lender and I've seen it requested by the title company too before. My lender requested proof of CO to roll over my construction loan to the full loan for my duplex I built.
BTW, the first rule in a law suite is to sue as many people as possible. This is just a trial technique. Now, the question is do they fight it or just put it out to their respective insurance company? Thats what I was getting at. Not that he would get a full pay out from each.
The point I was making was not to draw a distinction between new and existing construction but was based on the fact that in general, a title insurance policy only indemnifies the Insured against loss or damage caused by matters recorded in the public records of the county where the property lies. Public records as defined in most policies is limited to those established by law intended to impart constructive notice to third parties. Hence, if a notice of the construction defect is not recorded in the public records, the title insurer probably does not have liability.
If a lender requires proof of a CO before disbursing its funds and the CO is not obtained, that may be a violation of the closing instructions, but it does not go to title. Therefore again, the matter probably would not be covered by the policy. However, it the title insurer had given a Closing Protection Letter, it may have a responsibility to deal with the lack of a CO under that.
I don't know where you got your understanding of the rules of law, but I've never seen that and if an attorney I hired suggested naming parties who had no possibility of liability to a suit, I'd probably get a new attorney.