Federal mortgage agencies unlikely to trump building code
Q. I recently read your article explaining the legal requirements for a bedroom, but I have heard Fannie Mae and Freddie Mac do not agree with these standards for home appraisals. What I hear is they no longer count the square footage of rooms that are below grade, such as bedrooms in basements. Is this correct?
A. Fannie Mae and Freddie Mac are federally funded agencies that provide home mortgages. The idea that their appraisals would disallow square footage that is below grade seems far-reaching and unlikely, but I've made some inquiries just to be sure. Thus far, there seems to be no evidence that their appraisers have adopted such a policy, but who can predict the absurdities that bureaucratic minds are likely to concoct?
If it should turn out that these lenders are advancing such a policy, here's the main problem: Municipal building departments enforce building codes that are adopted as state laws throughout the U.S. So let's suppose a homeowner takes out a permit to convert a basement into additional living space, including bedrooms. The work is all done in accordance with lawful building codes, and the building official signs off the new rooms, designating them as legal square footage. Additionally, the property taxes may now be increased to reflect these improvements. How then can a governmental lending agency come along and discount the legality of building improvements that were officially approved by the local government? In my opinion, they cannot. If you are aware of instances where they are doing so, that would be a significant conflict of legality and would be worthy of dispute, although clashing with the feds would be a daunting prospect.
Q. I live in a very hot housing market and had to compete with many other buyers when I bought my home. In order to get my offer accepted by the seller, I waived my right to a home inspection. That was over three years ago, and since then I have discovered many major problems involving the foundation, subfloor framing, flood damage - you name it. The seller should at least have disclosed some of these issues, but his disclosure statement said nothing. Is there anything I can legally do to have him pay for some of the needed repairs?
A. This is a common problem when properties are flying off the griddle in a hot market: buyers will forego the discovery process to obtain acceptance of an offer. As you have learned, that was a risky decision with far-reaching consequences.
This error on your part, however, did not absolve the seller of the legal requirement to provide full and complete disclosure of the property's condition. At issue now is the time limit on liability in your state. You should check with a real estate attorney for that answer. In the meantime, you should hire a home inspector, the most experienced one you can find, to determine the full extent of undisclosed defects. A qualified home inspector will discover problems you have not yet realized, even after 3+ years of ownership.
• To write to Barry Stone, visit him on the web at www.housedetective.com, or write AMG, 1776 Jami Lee Court, Suite 218, San Luis Obispo, CA 94301.
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