Expert: Kerrin Kostelic, FL Broker Associate, GRI, AHWD - 1/13/2012

Question
Dear Kerrin,
I bought a as is foreclosed property in Jacksonville, Florida on 20 Aug. 2011. After the closing, I found out a patio in the back yard was built without city permit. The city's code enforcement office post a Safety Flag on this patio. Because of this safety flag, the city will not transfer the water/power supply under my name. The city said no one should legally use the water/power of the property due to the safety flag.
The safety flag was posted by the city on July 02 2011, before closing date. City inspector told the listing agent to inform this situation to potential buyers.
According to the listing agent, the copy of Permit Violation notice was scanned and posted to the listing of this property. Only licensed real estate agent can view this listing. I was only able to view the general listing of the property that can be viewed by the public. I didn't see any Permit Violation info on the listing I viewed. I didn't know there was Permit Violation on the property before I bought it. I did know there were some damages and malfunctions of the property, such as leaking plumbing, old A/C, etc...They called it "as is".
Neither my agent nor listing agent informed me by words or in writing of the existence of the Permit Violation/Safety Flag on this property.
My agent signed her name as Seller's agent in closing documents. She said she didn't know anything about the Permit Violation/Safety Flag before closing.
I didn't hire any inspector to inspect the property before closing. Property Survey was not supplied to me by closing agent because it is a foreclosed property, according to my agent.
City's code enforcement office told me I need to either tear the Patio down, or hire a licensed contractor to pull a Permit on the already built Patio.
Here are my questions:
1. Does the law in Florida require the seller, listing agent , seller's agent to supply Seller's Disclosure on foreclosed “as is” properties to potential buyers?
2. Does the law in Florida require the Seller, Listing agent, Seller's agent to exposure the existence of Permit Violation on a foreclosed "as is" property to potential buyers?
3. Is a Permit Violation considered as "as is" condition in foreclosure sales, according to law?
4. Should listing agent (who knows the existence of Permit Violation) and seller agent (who can view the listing where the copy of Permit violation was posted, according to the Listing Agent) expose the Permit Violation to the buyer, according to law?
5. Am I eligible to ask city to issue a Permit, or do I have to hire a licensed contractor to do this, according to law?
6. What could be the reason for a buyer's agent to sign her name in closing documents as Seller's Agent? Is it required by law?
7. The closing agent - a law firm, didn't indicate any existence of Permit Violation/Safety Flag in title search and title insurance. Do they hold any legal responsibility in this?
8. Do I hold any legal responsibility because I waived the inspection before closing?
9. Am I in a position to sue listing agent, Seller's agent, and closing agent?
Thanks a lot!
Lisa

Answer
Hello Lisa,

Ugh, this is a common problem with buying a foreclosed property!  Since you have so many questions, I'm going to list the answers to the corresponding question below:

1) Whether they are listed "as is" or not, licensees and sellers of property are required to disclose "all known facts that materially effect the value of the property, whether readily observable or not".  However, that disclosure has no formal method of presentation.  It could be verbal or in writing.
2) See above
3) Permit violations are considered an "as is" characteristic of the property just as any other condition.
4) See #1, yes.
5) You can pull the permit yourself and even do the work yourself but only if you are going to occupy this home as your primary residence. If you intend to use this property as an investment property and rent to tenants, you must use a licensed contractor to do the job. He/she will handle the permitting process for you as a part of the job.
6) I'm not sure I fully understand what the agent did here.  There is no lawful requirement to do this.  I'm assuming it was a clerical error on her part, but I'd leave that for an attorney to figure out.
7)  From my experience title searches regularly find these types of issues.  However, no title search is guaranteed for 100% accuracy, hence the need for title insurance.  Did you purchase this at closing to cover your investment?
8) Certainly, it wasn't the prudent thing to do in waiving the inspection---ESPECIALLY on a foreclosed property (Let this serve as an example of what can happen to others who may be reading this post!).  You agreed under contract to accept the property in it's "as is" condition without the benefit of an inspection so you do bear some responsibility in this. However, it doesn't excuse the real estate licensees behavior in withholding the disclosure of existing "material facts".  That is required of them whether you did the inspection or not. The question is Did they both have prior knowledge of this fault and can you prove it in court?
9) Obviously, you should consult a competent real estate attorney for advice on this question.  It does seem to me (as a licensee only and NOT an attorney)  that you have grounds to sue.

So sorry for your trouble with this property!  Hopefully you are able to rectify the issues soon and for an amount that still makes this a worthwhile investment.