Real estate closings can be stressful enough without unexpected snags. One common cause of frustrating delays is code compliance issues. These problems often arise during the inspection or appraisal process, and if they aren’t addressed promptly, they can jeopardize the entire transaction. By understanding what to look for and taking proactive steps, you can help ensure a smooth closing.
What Are Code Issues?
Building codes are sets of rules that specify the minimum standards for constructed objects such as buildings and non-building structures. They are designed to ensure the health, safety, and welfare of the public. When a property has a code violation, it means a part of the building or property doesn’t meet these standards. Examples can include:
- Unpermitted additions or renovations: Any structural change, like a new deck, a finished basement, or a garage conversion, usually requires a permit. If work was done without one, it can be a major red flag for lenders and inspectors.
- Safety hazards: This can range from exposed wiring to a lack of proper handrails on stairs, or even a non-compliant fence around a pool.
- Plumbing or electrical problems: Outdated or improperly installed systems can be a serious safety risk and a code violation.
- Structural issues: Problems with the foundation, roof, or walls that compromise the integrity of the building.
Why Do Code Issues Cause Delays?
When a code violation is discovered, it can halt the closing process for several reasons:
- Lender requirements: Mortgage lenders typically require a property to be in good condition and free of serious safety hazards. If an appraisal or inspection report highlights a significant code violation, the lender may refuse to finance the loan until the issue is fixed.
- Buyer’s concerns: A buyer may not be willing to proceed with the purchase if they’ll be responsible for expensive repairs or legal issues down the line. They might demand that the seller fix the problems, which can take time, or ask for a credit to cover the costs, leading to further negotiation.
- Municipal regulations: In some cases, a city or county may require that a permit be retroactively obtained and the work brought up to code, which can involve a lengthy and complicated process.
How to Avoid Code-Related Delays
Taking a proactive approach is the best way to prevent code issues from derailing your closing.
For Sellers
- Get a pre-listing inspection: Before you even list your home, consider hiring a professional inspector. This will give you an early heads-up on potential code violations, allowing you to fix them on your own terms and timeline.
- Organize your paperwork: Gather all permits and building plans for any additions or major renovations. Having these documents ready to share with potential buyers and their inspectors can provide peace of mind and prevent questions later on.
- Disclose everything: Be transparent about any known issues with your property. In many states, sellers are legally required to disclose certain defects. Full disclosure can build trust with the buyer and prevent surprises that could lead to a canceled contract.
For Buyers
- Hire a thorough inspector: Don’t skimp on the home inspection. Choose a reputable professional who has a keen eye for detail and is familiar with local building codes.
- Review the appraisal: The appraisal report is not just for the lender; it’s also a valuable tool for you. The appraiser will note any major issues that could affect the property’s value or the lender’s willingness to finance it.
- Build a safety cushion: When making your offer, consider including a contingency for the home inspection. This allows you to back out of the deal or renegotiate if significant code issues are found.
By being informed and proactive, both buyers and sellers can navigate the closing process more effectively and avoid the unnecessary stress and financial risk that code issues can bring. A little preparation goes a long way in securing a successful and timely closing.
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!