mortgageable? no permits

Guest 0.10 Dollars($)

I have heard this has been problems in the past.. I have this house. It is on 7 acres. It WAS about 1000 s.f. 3 bdrm, 1 bth, full basement, partial finished etc.. I sold it land contract to a guy who talked me into it, and renigged then! This is crazy cause he put ALL kinds of work in it. He added yes ADDED 3600 more SF! I am not sure EXACTLY what his plans were but I am making it a "mother in law" apt( I do not have zoning for a multi family) The new side has a 75 X24 garage and then upstairs has 1800 s.f three bdrm two bath, cathedral ceilings, etc.. nice. not all finished though, He pulled NO permits. Is this gonna be hard to mortgage to a buyer now?
I am just considering selling it now as I am overwhelmed

gmakerley · Posted: Fri May 02, 2008 2:51 pm Post subject:

sixty, you'd be wise to check with your local municipality to see what they think of the lack of permits. that is a logical first step.

Guest 0.10 Dollars($)

THank you George. the first thing I have done is checking with my local municipality. They came out, and are very understanding with me as far as not fineing me etc.. for not having permits. etc.. but they do not know about the mortgage end of it. I was told once that THIS may be an issue. That is why I thought I might seek some input from mortgage savvy people here! thanks again!

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi,

I have not ever anyone have not get mortgage only because of permits. Have consulted with any brokers on this?

gmakerley · Posted: Sat May 03, 2008 7:02 am Post subject:

it would seem that since you are speaking with the local building department that the lack of permits ought not to prevent you from selling and subsequently prevent your borrower from purchasing with a mortgage. if the town/inspector will sign off on the work that has been done without the permits, then you'll have a legal building, and that ought not to present a problem, in my opinion.

0.10 Dollars($)

Look at it from the lender’s point of view

The county may well try to accommodate your permit-less situation but obviously there cannot be “real” inspections with removal of substantial portions of drywall. Not very likely and if done, it would be very costly. Depending on state law this “defect” would have to be disclosed on any seller disclosure – on the first and subsequent sales. How do you factor that into appraised value? A “hold harmless” might get the lender off liability but just think of what may happen a year or so from now when the results of shoddy workmanship start to show up.

Guest 0.10 Dollars($)

now ya got me wondering! I know it would entail ALOT of labor and drywall, but maybe the value would warrant that. (value of home IF it was truly electrical inspected, code, compared to value without)

kpatrick · Posted: Sat May 03, 2008 8:15 pm Post subject:

Hi Sixty,

I wanted to address the part of your question regarding the need for multi-family just b/c it had an in-law suite. A house with an in-law suite is still a singe family residence. It is only multifamily when you have more than one mailing address under one roof. So no problem there.

If I were you, and I didn't want to finish out the home, I would look into selling it to an investor that renovates properties and then sells them. Or you could sell it to someone who is handy and wants to do the work themselves.

Kim

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