False disclosure of permit compliance

 
 
Posted9/18/2022 6:00 AM

By Barry Stone

Q: When I purchased my home, my home inspector only reported minor problems. Now I'm remodeling the interior, and the building department says the bedroom addition and the attic conversion were not done with permits. Before buying the home, I asked the previous owners and both agents if the addition and converted attic were legal. Everyone said that changes to the building were all permitted. Aren't these people liable for false disclosure?

 

A: In one sense, the answer to your question depends upon what the sellers and agents actually knew, but there are other considerations.

For the sake of discussion, let's give the sellers and agents the benefit of the doubt and assume they had no knowledge of the lack of building permits. A common situation, for example, would be that the house was altered by a previous owner and no one was aware of the lack of permits. The current sellers and agents, then, would be guilty, at worst, of making false assumptions. If that were the case, their answer to your question regarding permits should have been, "I don't know." The sellers, then, might have been excused, due to ignorance of the finer points of real estate disclosure. The agents, however, would be subject to higher standards of disclosure awareness. Failure on their part would constitute professional negligence.

Qualified agents know better than to affirm the existence of building permits without verifying them at the local building department. In fact, some agents routinely check for permits on every transaction, or they advise their clients to do so themselves by consulting the local building department.

Some home inspectors will conduct a permit search as an added service for an additional fee, but this is not within the scope of a home inspection itself. However, prudent inspectors routinely advise their clients to consult the local building department for a permit history of the subject property, prior to closing escrow.

Liability can also depend upon whether disclosures were made in writing, rather than verbally. For further advice in this regard, a real estate attorney should be consulted.

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Q: We signed a contract to purchase a new home and were told by the real estate agent that a home inspection is not necessary for new homes. Trusting this advice, we waived our right to have an inspection and now believe we made a mistake. We now want a home inspection before closing escrow and are wondering what we can do now that the final documents have been signed and we're ready to close escrow.

A: Real estate agents should never advise buyers not to hire a home inspector. To do so is the height of professional irresponsibility. All new homes have defects. There is no exception to this rule. If you've changed your mind and now want an inspection, you may have to insist with zeal. Let the agent know you are not kidding. If necessary, you can consult a real estate attorney, or you can file a complaint with the state agency that licenses real estate agents.

• Email Barry Stone at barry@housedetective.com.

© 2022, Action Coast Publishing

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