Selling a house with code violations

What a code violation is

A code violation means the city or county says something about the property does not meet a local rule. Examples include work done without a permit and debris left on the site. The notice usually lists what is wrong and gives a deadline.

Philadelphia’s Department of Licenses and Inspections explains the basic choice on its notices: fix every violation listed and pay any fees, or file an appeal. Until then the property stays in violation. Other places have their own steps, so read your notice closely.

Start by getting the facts

Call your code enforcement office, or the building department, and ask for a written list. You want to know what is open, what the deadlines are, what fines have been charged, and whether a lien has been recorded against the property.

• Which violations are open, and which have been closed?
• What does the city need to see before it closes each one?
• Do any of the repairs need a permit or an inspection?
• Are there fines, fees, or a recorded lien?
• What are the deadlines, and can they be extended?

What open violations mean for a sale

The rules depend on where the house is. In Dayton, Ohio, selling a property does not remove its violations, and a disclosure form for open violations is signed by both seller and buyer. The city says the form is not meant to stop the sale. In New York City, the Department of Buildings says open violations can prevent an owner from selling or refinancing. In Cleveland Heights, Ohio, owners must get a point-of-sale inspection before they sign a sales contract, and money for unfinished repairs can be held in escrow at closing.

The responsibility often stays with the property. Los Angeles says the current owner must comply with an order even if previous owners or tenants caused the violation. That is why a buyer will want to know about every open case. A city may also add fines or a lien, and the Redding, California, code enforcement office lists clouded property title among the possible results.

Because every place is different, ask your code enforcement office and your title company what applies to your address. They can tell you whether the city needs a certificate, an inspection, or a payoff before the sale.

What you may have to disclose

Many states ask sellers to fill out a property disclosure form, and many of those forms ask about notices of violations. Pennsylvania’s form asks about violations of zoning, housing, building safety, or fire ordinances that remain uncorrected. South Dakota’s form asks about zoning and building code violation notices. Miami-Dade County, Florida, has a code compliance disclosure that sellers give buyers about illegal construction and outstanding code violations when they enter a contract.

Do not guess. Check your state’s form, and ask a real estate attorney what you must disclose. Hiding a known violation can put the sale, and you, at risk. Telling a buyer up front keeps the price and the plan honest.

Option 1: Fix it first

Fixing the problems and having the city close the case means you sell a house with a clean record. It also costs money and time, and the work may need permits and inspections. In Philadelphia, for example, work done without a permit is corrected by getting the required permits and then requesting an inspection.

Before you start, get written bids, and ask the code office what it will accept as fixed. Compare the cost of the work with what the sale price would gain. If the repair bill is larger than the gain, fixing first may not be worth it.

Option 2: Sell as-is

You can sell the house with the violations still open if the rules where you live allow it. The buyer takes on the work. Expect the price to reflect the repairs and the unknowns. Tell the buyer, and the title company, about every open case and any fines or liens. Ask the title company whether any city liens must be paid at closing.

Some cities have programs that help a buyer finish the work. In Fresno, California, a purchaser who contacts the city before buying can sign a lien waiver agreement. It sets the work needed to fix the violations, and the purchaser can request up to 90 days to finish it. Ask your city if something similar exists.

What not to do

Do not ignore the notice. Deadlines pass, and code offices can add fines, liens, and other legal action. Do not do repairs without the permits the city requires. Work done without a permit can be a violation of its own. Do not leave a known violation off a disclosure form.

If money is tight, say so when you call the city. Ask whether payment plans, extensions, or programs for owners who are working on the problems exist.

When you talk to a buyer

Have the notice, the deadlines, and any fines or liens in front of you. If you talk to us, tell us what the city cited and any dates that matter. We can talk it through before you pay for repairs. Compare any offer with what it would cost to fix the violations and sell the usual way, and check with your local code enforcement office before you decide.