As a property investor, you’re always on the hunt for the next promising opportunity. The real estate market can offer lucrative returns, but it’s crucial to conduct thorough due diligence before diving into any purchase. One often overlooked yet critically important step in this process is the violation search, specifically focusing on building permits and potential violations.
Skipping this step can lead to unexpected costs, delays in your investment plans, and even legal headaches. Here’s what you, as a savvy property investor, should be looking for when conducting a violation search:
Understanding Building Permits
Most significant construction, renovation, or alteration projects require building permits. These permits ensure that work is done safely and in compliance with building codes. When you’re considering investing in a property, you need to understand the history of permitted work done on it.
Why is a Violation Search Important for Investors?
- Unpermitted Work = Potential Problems: If previous owners undertook construction or made significant changes without the necessary permits, these could be considered violations. This might mean the work wasn’t up to code, potentially leading to safety hazards or the need for costly remediation.
- Financial Implications: Unresolved violations can prevent you from obtaining insurance or financing for the property. You might also be responsible for rectifying the violations, which can involve tearing down unpermitted structures, redoing work to code, and paying fines.
- Delays and Headaches: Dealing with open or unresolved violations can significantly delay your investment timeline. You might face difficulties in obtaining occupancy permits or selling the property in the future.
- Disclosure Issues: As a seller, you will be required to disclose any known violations. Discovering them late in the process can jeopardize the sale.
What to Look for in a Violation Search:
When you or your team conduct a violation search, focus on the following:
- Open Permits: These are permits that were issued but the final inspections haven’t been completed and the permit hasn’t been officially closed out. Open permits can indicate unfinished work or potential issues that need to be addressed. Investigate the scope of the open permit and why it remains open.
- Expired Permits: Permits have expiration dates. If work wasn’t completed within the allowed timeframe, the permit might have expired. This could signal uncompleted projects or work that needs to be re-permitted.
- Notice of Violations (NOV): These are official notices from the relevant governmental authority indicating that a property is not in compliance with building codes or zoning regulations. NOVs will detail the specific violation and often provide a timeline for correction. Pay close attention to the nature of the violation and its current status.
- Unpermitted Structures or Work: Look for any additions, alterations, or structures that don’t have corresponding permits on file. This could include additions to the house, sheds, pools, or changes to electrical or plumbing systems.
- Zoning Violations: Ensure the property’s current use aligns with local zoning ordinances. Violations could include operating a business in a residential zone or unapproved modifications to the property’s footprint.
- Lien Information: Unresolved violations can sometimes lead to liens being placed on the property by the governmental authority. Check for any outstanding liens related to code enforcement issues.
Where to Conduct a Violation Search:
- The Building Department or Equivalent Agency: This is the primary source for permit records and violation information. Most governmental agencies responsible for building and code enforcement have online portals where you can search by property address.
- Title Company: Your title company will typically conduct a search as part of their due diligence, but it’s wise to review their findings carefully.
- Professional Inspection Services: Hire qualified inspectors who are experienced in identifying potential code violations.
Best Practices for Property Investors:
- Start Early: Conduct your violation search as early as possible in the due diligence process.
- Be Thorough: Don’t just rely on online searches. Visit the building department if necessary to review physical records.
- Understand the Details: If you find permits or violations, carefully review the documentation to understand the scope of work, the nature of the violation, and its current status.
- Seek Expert Advice: Consult with real estate attorneys, experienced contractors, and inspectors to assess the potential risks and costs associated with any identified violations.
- Negotiate Accordingly: If violations are found, factor the cost of remediation into your offer price or request the seller to resolve them before closing.
By diligently conducting a violation search focused on building permits, you can protect your investment, avoid costly surprises, and make informed decisions in a competitive real estate market. Don’t let unpermitted work become your next big headache – make the violation search a crucial part of your due diligence process.
At ViolationClinic.com, we specialize in helping property owners navigate the recertification process smoothly. Whether you need assistance with inspections, violations, or compliance issues, our team is here to help. Don’t wait until it’s too late, take action today to protect your investment and ensure the safety of your building.
For more information or assistance, contact us at ViolationClinic.com!