Expert: Jessica Bryan - 9/24/2007

Question
QUESTION: Hi Jessica,

We just found out today that the house we are trying to buy (no offer has been submitted yet) has an illegal extension (the family room). We also found out from the City Hall that the owner will be meeting with its representatives on 10/05/07 to settle down the matter. Is there a chance that the City will refuse to legalize the extension/family room? If yes, what will happen to it? What should we do now?

Thank you, in advance, for any advice.

Regards,
Andrew

ANSWER: Dear Andrew;
The city permits additions and if one was done without a permit and/or if the room encroaches on easements or boundaries, then the owner will have to remedy this situation before selling the home.  There is nothing for you to do but wait and see what happens.  If the situation is not cleared up, I suggest that you look for another home.  You would not want to own a home and then incur future problems since it is possible that the city might levy a fine or insist that the addition be removed.  Once you take ownership you own all of the problems as well.  Furthermore, you can't claim that you didn't know about the non-permitted room before you closed on the home.

I suggest that you write an offer pending disclosure of remediated non-permitted structure.  (Put it in your own words.) You want to make sure that if the structure issue doesn't get handled adequately that you are not held to the contract.  You can have your agent check with an attorney as to the way to word it, but the purchase must be contingent upon the resolution of the un-permitted structure. Speak with the owners of the home and make sure you understand what is being done about it and ask for written proof of the resolution with the city once it is done.  You will need that for your files in the event you buy the home.

Good luck,
Jessica Bryan

---------- FOLLOW-UP ----------

QUESTION: Dear Jessica,

Thank you so much for your quick and helpful answer! We've decided to move on to another house. And I have another question for you. Is there any kind of contract between us, buyer, and our agent, who works for Coldwell Banker? If yes, when should we sign it? We've been told that if there is something wrong with the paperwork and there is no legal contract between us and the agent, we will be responsible for everything. Is it correct?

Regards,
Andrew

Answer
Dear Andrew;
Most states are now using "Agency disclosures" and "agency contracts."  These are an agreement between the buyer and the agent to allow the agent to represent the buyer in a transaction.  Without the agreement, there can still be a Buyer's agent if they are acting as one, show homes, and assist with the writing of an offer to purchase.  Laws differ from state to state, but I know that if you have an understanding (even without the signed contract) the agent has an implied agency with you and must abide by the laws of agency.  Being responsible for everything implies that you need to write up your own offer, make all of the arrangements for closing, inspections, attorneys, etc.  That simply is not so.  The agent should be responsible to do this.  If, in your area, the agent will not do that work unless signing a contract with you first, then by all means, make sure that you have signed one before looking at any homes.  When you do sign an agency contract may I suggest that you interview the agent first to make sure that you get along with this person quite well since he/she will be representing you in one of the most important purchases of your life.

Good luck,
Jessica Bryan