Expert: Russel Ray - 1/7/2012

Question
Mr. Ray,
On Aug. 25 2011, I bought a "as is" foreclosd property in Jacksonville Fl.
Later on, I found out from the city that an addition was added to the property without city's permit before I bought the house.
In July 2011, the city posted a safety flag because of lack of city permit on this addition. I am unable to get the water/power supply from the city because of this flag.
Neither my agent nor seller's agnet informed me of existence of safety flag or "permit" issue before or during closing. The closing agent didn't inform me of such either. I bought the property without the knowledge of the existance of safety flag.
The city told me that at the time (July 2011) the flag was posted, they (city) had informed the listing/seller's agent of the post of safety flag due to lack of permit.
However, no one informed of "safety flag" issue on the property. I only found it out when I ask city to turn on the water/power for me...The city told me I can contact a license contractor to pull a permit. I have talked with several contractors, majority of them don't do it for me because they don't want to get involved in something weren't buit by them. Others offered me a very expensive price...

My question is:
1. Are real estate agents required by the law to expose the knowing permit/flag issues to buyers on a "as is" foreclosed property?
2. Are "no-permit" and "safety flags" factors considered as legimate "as is" condition of a foreclosed property? (I understand plumbing damage, broken walls, and etc...are as is conditions)
3. What would you suggest me to do in order to get  the power and water supply from the city?
4. Is it my responsibility to pull the permit from the city on my expense?
I am so lost. I need your help.
Thanks and happy new year!
Lisa

Answer
Hey, Lisa.

Answers to your questions:

1 - Yes, but you might have an issues trying to prove that the agent know. In some cases, you can't even prove that the Seller knew because, as an example that I'm familiar with that occurred here in San Diego back in 2005, the Seller's son came by and removed the flag without telling Seller Dad about it. So Seller Dad had no knowledge to disclose.
2 - In an as is situation, everything is as is. However, that doesn't absolve you of the responsibility of doing your own due diligence to discover just exactly what as is, is. For example, a home inspection by a thorough home inspector would probably have made some good deductions about the unpermitted addition, and your own real estate agent should have told you to check with the building department to see if there were any issues you should be aware of.
3 - Most cities will issue you an as-built permit because all they really want is the money, and then they get additional money from property taxes on a larger house in the future. I'm surprised that a contractor doesn't want to get involved. That's poor contracting in my opinion. Call some more contractors until you find one. It's not hard to verify proper plumbing, electricity, gas, and construction if you're a good contractor.
4 - At this point it is your responsibility to pull the permit from the city at your expense. However, you should also consult with a good real estate attorney for further options under Florida law, because I suspect you have some. Most real estate attorneys will give you a free 30-60 minute consultation, and from watching the case unfold here in San Diego, there is usually some good money to be made in these types of cases. The one here settled mostly out of court, but not before the listing agent paid $455,000. The Seller was judged guilt by the Court and fined $500,000, attorneys fees of something like $1.6 million, and punitive damages of $5 million or so. Fraud, negligence, and misrepresentation in real estate are high-profile crimes and usually deal with millions of dollars. Get with that attorney first and foremost, preferably Monday.

Russel