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The seller bought the property with open permits and code violations?

BOSS Construction Group Podcast
BOSS Construction Group Podcast
The seller bought the property with open permits and code violations?

The seller bought the property with open permits and code violations? Benjamin Sens, President of BOSS Construction Group, explains situations where the sellers bought the property with open permits and code violations. Need to close an open permit or code violation? Please contact us at (954)541-9464 or email us at info@bosscgc.com


Benjamin Sens 0:13
I’m a general contractor, I used to work in the city of Weston, really nearby, I used to work in Miami Dade County is a building inspector and code officer. So I’m a general contractor. And what I specialize in doing is I specialize in helping real estate agents and brokers and sellers of property, and great title companies like Wendy, I help resolve permitting and code violation issues. So anything that the municipality may have sometimes here, I’ll pass around this information on on the side, I guess, here you go. And I’ll leave this here. And the same for the other side.

So I’m going to start the presentation a little bit differently. And I want to go over this, a lot of people didn’t understand this on our call, the difference between a title search and a lien search. So this is reliable lien search, there are municipal lien search company, and they’re accurate. And I use them to pull lien searches on properties all the time, whether it’s commercial or residential, when do you use them. And the point is, it’s very important. So it doesn’t affect our transactions to get this information in quickly. A lot of these municipalities, they’re slow on reporting. So these are the things for example, I had a cash transaction, a client in lauderhill, lauderhill takes 10 business days, along with charging a couple $100 to get back their municipal permitting, and code violations. So there’s a couple parts on the municipal lien search. And I could scroll to that. And we’ll go over that later. That includes water and taxes. But we’re going to be talking about municipal code violations. So just some quick definitions for the audience. We’re going over building permits, we’re going to go over expired building permits. A lot of those times, a lot of times we have expired building permits, because contractors and calling for final inspection, or they did work outside the scope of work. Basically, the city or municipality didn’t final it out. So those come up on lien searches very commonly, more commonly than unpermitted work, we get expired permits. So we also have code violations. We have code violations can range and in general, they could be for work without permits. They could be property maintenance, they could be basically anything that’s violating the municipal law. So we have the Florida building code, and we have the city’s zoning code, the city’s regulate signage, parking, anything you see on the exterior of the building landscaping, the building code obviously regulates the structure. So

So basically, the lien search, if it’s pulled very early on, you can find out about these issues when you take the listing as opposed to waiting for the buyers title company to come back with a lien search and give it to you and say we have problems 1015 days before closing, and the buyers gonna lose their rate lock or you’re gonna you know, have to go under contract with another buyer and things are moving ever so quickly even before they were in this crazy market, which is great. So we’re gonna go over what a re occupancy certificate is. A re occupancy certificate is primarily used in a lot of municipalities in Miami Dade, like North Miami, like el portal, Hialeah Hialeah gardens. We’re starting to see cities in Broward starting to kind of do a little funny business. They’re starting to go on Trulia and Zillow. And when you guys use the MLS to market your property and put up the listing that some of the cities are going in the code officers are sitting at their desks or at home, they’re seeing a beautiful condominium and see Haven and Pompano this older building with all new renovations, and then they go into the system and then they see there’s no permits. So ri occupancy is a license in Miami Dade County to check for unpermitted work and code violations, older parts of the county, but in Broward, they’re also doing it as well. But they’re doing it kind of in the backdoor way. They’re sitting at the computer like a police officers are looking for underage drinking or like house parties. So again, that’s what we’re seeing right now. And the second that a listing is put up. We’re seeing a code violation come in between in Deerfield and Pompano when the listing is put up, and sometimes between when the property goes under contract, so, yes, so it’s really important you guys use your sellers disclosures. That also, you know, is something that the seller is supposed to fill out. A lot of sellers may not know they have unpermitted work, they might not, they might have bought the property in the previous lien search company didn’t pick it up. That’s another thing I experienced a lot. It’s very important because a lot of other title companies and lien search companies, they are not reporting everything. So when your seller has to go when your seller has to go to sell, hopefully it’s with you a couple years down the line, and you’ve maintained your relationship with them. When surprises pop up, they’re gonna come to the agent. So it’s very important that we use reliable resources and people who are on the same page.

Unknown Speaker 6:26
Sure, if that’s the case with my seller, what do I do? You bought it this way. And the other closing? Sure.

Benjamin Sens 6:37
So sometimes it depends how they purchased the property. Sometimes they bought a foreclosure from the bank, they might have signed a hold harmless agreement, the lien search company might not have picked it up who was working at the time, or they might not have run a complete title or in lien search. You can close with open permits and code violations. So if anything was missed on the previous closing, you should always go back to that title company. And again, I’ve had horrible situations where there was work without a permit and hollandale that was completely left under the rug, the the title company didn’t pick it up, the lien search company didn’t pick it up, and then the seller has to close. So again, that’s why we buy title insurance. That’s why we hear that. So again, to recap, to do kitchens and bathrooms and condominiums, let’s say after the fact, they want to see the concealed work, they want to see the electrical panel, they want to see that there’s do rock or cement board behind the shower tile, or the bath tile. So it can become costly. It can become just administrative, it really depends on the circumstance. But I take my time to evaluate each situation. So maybe I was in sunny house the other day, there’s a condo that has an open flooring permit, but from like 2002. But they renovated the kitchen and bathrooms without a permit. So I provide guidance to the agents and the title company, I evaluate. I provide advice, maybe this is something Hey, we want to credit the buyer for that open floor permit, when they pull a permit later for the floor and redo it, then they’ll close out this one. So all sorts of properties have different things. And there’s many ways to navigate them. But we want to be aware of the you know, I don’t want you guys or your sellers to make assumptions about this is done right or that’s done right. And then you call the city to close it out. And then they find other problems. So that’s what you have me therefore is something to a buyer. We were the title company asked for the lien search in a series. Any No no, that means the permit the permit, there was any there. It so we close in February. And now last week, this city went to the new owner saying that they don’t have the permit for this fence. And the fence was there. Sure, in all the pictures, all the previous survey inspections if it was the new owner.

And in the in the case of the city, they don’t care if it was the previous owner, they don’t care if the if the neighbor has it, they just want you to get a permit for it and do that as quickly as possible. I was just around the block and sunrise just for a pool. This pool had a broken fence. It was an open permit. The gates weren’t self closing and self latching. Maybe some other time but if you guys tuned in to the class, what was really cool, we went over on the property appraiser. And something that not any county other than Broward has that I know of, you can and I’ll show you what the share screen if we have time, you guys can go on the property appraiser. You guys can scroll down every year and aerials taken to the property. So that’s how a lot of times these cities, they either find out because the neighbor complained, they find out because there’s an aerial available on the property appraiser. And you could go back to 1998, to see additions, different things, you can make measurements. So Marty, Karen, our property appraiser, they provided us with a lot of tools. those tools are also available to the local municipalities. I use examples like in the city of Hollywood, one of my clients said, How does the city know that I’m renting out my place, it’s under my name. It’s a house, they’re looking for electricity bills, because they want to get their occupancy license for. So what the cities are starting to do, is airbnbs and vrb O’s are going on, is they’re starting to want property owners to get licenses to register these properties. And then they want to use those licenses to make sure there are no unpermitted improvements or health safety issues. Because when and again, the zoning doesn’t allow for it, if you have a single family house, you know, it’s you can’t run an Airbnb out of there. And that’s what a lot of this, that’s what was happening with a lot of the cities. So people were running Airbnb, the neighbors were complaining, and now you’re inviting the public onto your property. You don’t have fire alarms, you don’t have meet handicap ramps. So they’re trying to say if you so the building code changes when you’re your own residents, the building code changes when you’re in a condominium, and you’re attached to other people. But most of the things in single family houses like in lauderhill. With the fence, people don’t pull permits for just on the exterior, they pull permits for Windows fence roof. But most the times the kitchen and bathroom improvements and remodeling. Paint doesn’t require permit. But again, anything with plumbing and electrical does. And a lot of times these things are going to people you’re going to bring buyers to properties and all these properties. They might not have a single family kitchen permitted or bathroom permitted. And that’s what I’m here to explain to your buyers and help educate them. Because and just because there’s no permit doesn’t mean the works bad, you know? So there’s all sorts of situations. And again, it varies what city you’re in. It varies. What type of property you’re in. Is it a condo? Is it a townhouse? Is it attached? Or is it single family? Or is it commercial? So all of these types of situations vary? Does anyone have You look familiar, I think all right. Okay, but the bagel shop with the bagel shop. I got all the bagel shops. West mitches Westside bagel. Yeah, okay. Okay, okay, cool. Anyway, what’s your favorite baby? poppy seed with salmon spread.

What level of modifications of elevations to a kitchen or bathroom you need to permit for every single so everything’s gonna require permit anything. Every anything even some people say like in Bonaventure, I was just at a condo and they they’re just replacing the kitchen countertop and the backsplash? Well, when you do that you’re touching the electrical outlets on the backsplash even if the sink is going in the same place. So as far as the city is concerned, they want a permit for everything. Does it make sense to pull a permit for everything? It doubles, triples quadruped, like if you build a shower, I could just build a shower. But if you now you now if you want to pull a permit, you got to get plans, you got to stop every step of the way. Get your your board inspection, get your tile inspection, get your plumbing inspection. So, but technically, everything except for painting and molding, like the crown molding and molding around the interior doors. Everything’s going to require a building permit. And every city has a different way of assessing it. So some use a job value. Some use a particular scope, but I see a lot of investors right now like they have these handy guys doing the work. They leave the toilets, they leave the cabinets outside. You know there’s there’s different ways to do work to not call attention to yourself. They also work on Sundays and the neighbors are complaining but I was in lighthouse point. Some guy he Random, he gutted the whole house. And he pulled the permit for the roof. And I said, Well, why don’t you pull permit for the windows and driveway, because if you did that, they probably wouldn’t have caught you doing the whole inside this is in a single family house, not in an HOA, but you have to be very careful, because, again, this mistake, cost him a huge chunk of his profit. So he was looking to, you know, profit $100,000 on this $1.2 million flip. And to permit everything, get engineer plans, change all the windows and the doors and any electrical things he spent close to $30,000. So some, like 60% of the time, you might be fine. The other 40% you’re gonna get caught. You know, if you ask my father in law, he doesn’t like to pull permits at all. He says, When I get caught, I get caught. But again, you’re gonna end up paying for it either either way, when the municipality comes in for an inspection, when one of the tenants complain when you have to sell the property, so at some point, it’s going to come up, it’s just a matter of when, and how to educate the client the best. So I educate people all the time, and we inspect work, we evaluate it, and we say, hey, credit the buyer, some money, let’s get to the closing table. This is just a fence we call you. Preferably, you should give me a call when you’re listing the property, if you see an issue, or the seller says I might have an open permit, preferably you what I what I like to tell people to do is to order a lien search when they take the listing. While this is expensive, it costs 200 $300, it’s going to cause you a lot of problems and protect your investment. If you explain to your buyers, hey, we need to pull a lien search to where I can go to the city. And I can find out any type of open permits or code violations or liens. Because these things take 1015 2030 business days to get resolved. And sometimes they can’t get resolved at all, because there’s all this unpermitted junk around it. So we have to find different solutions. But the best thing is to get me involved in the beginning. Once you now in the far bar as his contract, which I’m sure you guys use, you have an inspection period. What happens a lot of time is when the buyers lien search comes in late. You get the lien search after the inspection period. And that’s why our brokers and our real estate leaders all tell us to put an addendum in the contract to say that the sellers to close open permits or code violations at own expense. Because the contract doesn’t stipulate it only says that the sellers code to cooperate. Well, what does that mean? So imagine if you represent the seller, and they got negotiated with during the inspection period, and then the lien search came back? Do you think they’re gonna want to negotiate again? So it’s important to find out all these things in the beginning with a municipal lien search? We know about that. At the moment as

anything we have? Absolutely, absolutely. And it’s, it’s a lot easier for me to help you if you represent the seller, if you represent the buyer, I can come in and valuate it or get the seller or their agent to cooperate. But it’s it’s the earlier we find out about this, the better with the lack of inventory right now. I’m getting bombarded just with with problems that needed to be fixed yesterday, when we could have found out about them previously. So again, I’m not trying to scare you, but learn. Learn, like for example, if your seller has new windows and doors on their house, and they say, Hey, I did that why green PACE loan, which is another class I do, that’s a loan that needs to be paid off at closing on the HUD that’s attached to the tax bill. So these are really important things to look out for. And to let your title professionals know your mortgage professionals know because I had an agent that was a $35,000 PACE loan for windows and doors, and they didn’t have the money to close. You know, so again, having to note and on our MLS. It now asks, Do you have why green? Do you have energy ecoenergy stuff. So all these things are very important. And whether you’re new in the industry or you’re experienced in the industry, they’re all changing and they’re different from from where you are. So it’s very important to look at the property Call me if you have any questions. I could contact the municipality and we can go from there. Um, this is a video which I think will Can I play it?

Unknown Speaker 20:05
Well if you believe the experts you can get a great deal by buying foreclosed properties but you can also get lots of headaches especially because the previous owner leaves behind past due balances. That’s what happened to one woman so she calls out the hour with Patrick.

Unknown Speaker 20:27
If you’re thinking about buying a house in foreclosure walk through here read her husband bought this house and are fixing it up Teresa

Unknown Speaker 20:37
on a lot of little things that had to be done to it and to make it you know, appealing and there were more

Unknown Speaker 20:42
buyer foreclosed properties can be a lot of work can be lucrative. But you never know this applies.

Unknown Speaker 20:48
Apparently the person that lived in this property before only PayPal, which is illegal in Miami Dade. So they came and they find him

Unknown Speaker 20:57
around was fined $510 by animal control when you didn’t pay that the county threw in a $10,000 fine, needless to say didn’t pay that either. So the county slap the lien on the

Unknown Speaker 21:08
property. It’s not fair for the buyer to have to be faced with this fines. Since the

Unknown Speaker 21:13
lender had foreclosed on the property. Maria thought they should have to pay the $10,000 plus lien. Their attorney disagree.

Unknown Speaker 21:20
The lawyers for the center said that they could not find anywhere in Florida statute that said that the county could enforce this fine. For Maria

Unknown Speaker 21:30
convinced the county to lower the fine to $5,510. And she paid but she’s still convinced the dog owner for the seller should have to reimburse the county.

Benjamin Sens 21:41
So this is an example. But it’s fine. She’s just going to reiterate the same stuff. This is an example from a couple years ago, but it’s a tenant who the previous owners tenant who was on the property, didn’t get their dog’s rabies vaccinated and got fined for having pitbulls on the property. This was a lien on the property. But before something becomes a lien, key liens don’t come up, you know, within days or weeks or months, many years of non compliance. So people come to me all the time. And they say Ben, can you fix this problem This week, we have to close the first and the liens, the 80,000 or $800,000 liens, we could get those negotiated 234 or 5%. So something manageable. But that takes some time to get to a hearing which there they’ve always been doing thank God, the municipalities, the lien searches, we’ve been getting them all this whole time, it’s been keeping everything going and the property’s moving. But before you get to the lien reduction hearing, the city needs to come to the property and bring everything into compliance. And you see this opened up kitchen. They knocked down that wall like in every other house. So they did so you run into issues when you’re trying to get that lien reduced. So it’s important to know about everything. Maybe we might want to keep the inspectors outside the house, not inside the house, maybe we might want to do some type of engineer’s letter to say everything’s okay, in lieu of the city coming in the house. So there’s all sorts of resolutions that we could do. But this stuff happens all the time. It happens to my commercial shopping center owners, the tenant does a build out, they don’t pull a permit, they get fined by the city for not having their occupancy license. And then the city finds out they did a bunch of stuff. Let’s see this one. So this is one that we talked about right animal and pet citations, noise complaints, excessive trash and debris, inoperable vehicles, overgrown lots. The re occupancy inspection started out with all the Oreos and the bank owned properties, which will come and see again, but now the city has a different way of of registering. They want to register the vacant properties. Why do they want to register the vacant properties because they have property maintenance issues. The lawn isn’t being cut, the pool is green and causing you know we had a bunch of those all over the place. And if there’s not an HOA there, even if there is in some cases, it’s hard to get them to fix it. But if there’s not an HOA there, you’re living next to it. It’s a pain in the butt. It’s really a pain and it’s a nuisance. It’s not in my backyard kind of thing. This is in silver lakes in Miramar. And basically a lot of this is a 1996 gL Home Screen enclosure permit. It went through five or six transactions, but between that owners attached electric to it. There’s a pool there. They didn’t ground the electric the door didn’t Self clothes and self latch. So they they adopted or they they changed the engineer’s plan and put a metal roof on there. So I can’t bring this structure into compliance. This is an example of where I said credit the buyer some money. What is the screen enclosure cost what is a new one costs 60 $500 or whatever cost. So the seller credited the money the buyer, the seller credited the buyer money, they got to the closing table, which was great

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