Hoping for a little advice here - not sure how to proceed. I’m a first time home buyer who recently closed on a house. The house had undergone some major renovations (basement dig out, sewer, plumbing, electrical, renovated kitchen and bath). I had a home inspection and the seller agreed to fix pretty much everything the inspector caught. After closing, I discovered a gas leak. Ensign came out and told me the gas line had been poorly installed and asked if my house had passed its final inspection. At no point during my due diligence or closing was this brought to my attention. I understand the buyer is responsible for gathering this data, but I didn’t know what I didn’t know. I natively thought that you couldn’t possibly sell a renovated house without a final. Come to find out, the house has NOT passed its final, there is no certificate of occupancy, and I’m not legally allowed to live there. As the buyer, I’m now financially responsible for these repairs and for obtaining the certificate of occupancy. The seller/renovator/flipper is also a real estate agent. Are either the seller or my realtor at fault for not disclosing this to me before closing? I just feel really taken advantage of and I don’t know what to do. I appreciate your guidance if you have experience in this area.
You are correct they should have disclosed the lack of a certificate of occupancy and having unpermitted work is an issue too.
In my state, the title company will not permit closing without a copy of the CO.
WHOA. Yeah, not having a certificate of occupancy on a remodel is a major disclosure item. Have your agent contact the seller immediately and demand all repairs and permits be rectified immediately, and that you will be charging prorated mortgage payments for every day until it is obtained. Tell your agent they need to contact the broker of the listing agent/seller ASAP as well. This is the time to be aggressive. I would also quietly hire an attorney and not tell either agent yet. They need to get up to speed and in the meantime you want people to be cooperative in the hopes you won’t hire an attorney. But I would dual-track this. You weren’t taken advantage of, you were screwed. Now…your agent does have some liability here too. They should have verified the remodel permits and COO. But it’s a common mistake and honestly you want your agent on your side right now. So keep the idea of holding your agent responsible in your back pocket for now and play nice. You can always change your mind and go after them later. If the seller doesn’t immediately agree to all of this in the next two days, file a complaint with the local board of realtors and have your lawyer start sending legal letters ASAP. You may end up having to sue but unless I’m missing some big piece of the story you should win and they would be on the hook for your legal fees. Keep in mind the gas leak is probably not the strong part of your claim. You had an inspection done and it wasn’t caught. There’s no way to know if the seller was aware of the leak. Also the shoddy plumbing is kind of in the same boat - as the buyer these were up to you to find. But the lack of a Certificate of Occupancy is a very big deal and absolutely should have been disclosed, and there’s no way the seller can play dumb on that.
Thanks for your quick response. My inspector found a gas leak on the initial inspection, the seller’s crew repaired it, then it leaked again. So it was the repair work that was done poorly that Ensign commented on. Again I feel like an idiot but I assumed the repair would have been signed off on during the final. I can’t find any info anywhere that states that a CO is required to sell a property. Does that vary state to state? Will definitely be contacting a lawyer for advice. Thanks.
@Van
Even if it’s not required, which I have no idea how your state works, they still need to disclose it. Was it written in the seller’s disclosures that the property had no certificate of occupancy?
I feel like the failure to disclose the lack of CO is something the selling agent SHOULD be responsible for. They reasonably should have known that was needed and disclosed that it wasn’t done. At the very least that’s an ethics violation.
@Quincy
It was not in the disclosures.
I didn’t have to disclose anything when I sold my house in NYS in 2023. I didn’t even complete a disclosure form due to some weird law in NYS.
It probably isn’t required to sell the property, but the lack of occupancy certification would be a disclosure item, at least in most states. Some states are broad and sweeping. For example, in California the standard is something like anything that could affect livability or habitability of the house, and this has routinely included permits etc. What state are you in?
@Shannon
Utah.
How in the world did this close? Did your title company or closing attorney not think to seek a CO since it was a flip? The renovations must have been obvious in the listing?
Cass said:
How in the world did this close? Did your title company or closing attorney not think to seek a CO since it was a flip? The renovations must have been obvious in the listing?
I didn’t have an attorney and the title company did not ask for a CO. Will be calling them tomorrow to learn more.
Were real estate agents involved? They are the only ones who can be held accountable once the sale closes, and even then you’ll be lucky to get anything from them. Most states are “buyer beware” as in the responsibility falls on you to make sure everything has been inspected and is working properly prior to finalizing the purchase.
@Lael
Agents were involved but you’re right, the contract language reads that it’s my responsibility to gather all this info during due diligence. I’m just disappointed and surprised that my agent didn’t guide me through that process more thoroughly.
@Van
Yes, your agent definitely should have guided you. You can report them to the state licensing board, they should not have let this happen. The selling agent should have disclosed this as well, and depending on what they knew ahead of you going under contract (and didn’t disclose) they could be responsible too.
The hall also may have been dropped at lending and title. I know if the home shows up as having major renovations and permits were pulled that lenders and title will ask for copies of permits and C of O. I’d call the city and ask for the inspection records, if the plumber failed to pull a permit and/or call for final inspection, they could be liable as well, and it could have been over the seller’s head as far as knowing how subcontracting goes & what the process is if they didn’t have a general contractor managing the extensive construction. Which, of course is still their fail but stupidity or not they are still liable. Get an RE attorney.
Permitting and inspection (in regards to COO) requirements vary wildly between municipalities. Where I live certificates of occupancy are issued for new construction, and never needed for a renovation (they are needed for an addition, but it doesn’t revoke or replace the main house COO). Also, there’s not a ton of work you need permitting/inspections for. Interior gas line movement or replacement would not need a permit/inspection. Where I am ¶ there is a specific disclosure question about the status of the certificate of occupancy. There are also questions directly about if permits were issued, and inspections completed. So, first thing is to figure out what is required in your municipality. Did this work require a permit? Did they get a permit and not get it inspected? Did they not get a permit? If they didn’t get a permit, you probably already have a COO. Call your municipality building department, they can walk you through everything. Then also look at your disclosures. Are there any questions about permitting/inspections/COO? The fact that the seller was also the RE agent makes me think (hope) they aren’t dumb enough to lie on disclosures. But, dumb people exist in far too great of quantities, so who knows. If they did knowingly lie on disclosures you can not only sue them, but you can report them to the states licensing board.
Thank you. Really appreciate the response. I’ll report back when I have more info.
I’m not sure how you can close on a property with no CO. This should have been uncovered by title search. Did you purchase title insurance? If so call them. Also, contact the realtor who sold you the home, explain what happened. If you are not satisfied, call your state board of realtors and file a formal complaint. Keep all of your paperwork and email correspondence.