Selling a home with City Building Code Violations

Selling a home with City Building Code Violations, by Chris Eckert

On Tuesday, we FINALLY close escrow on one of my listings in the North Shoreview neighborhood of San Mateo.

1514 Monroe Ave – San Mateo

Staging by Kerry Roth – Décor Staging

It only took us 6 days to sell it, but 3-1/2 months to close escrow, and it isn’t even a short sale.

The property was listed for $475,000, and we received 8 offers, all for over asking. We took the best offer, which was $503,000.

Everyone was congratulating me on selling it so fast, until I got that dreaded call from the City of San Mateo Code Enforcement Officer saying……..”Chris, this is Officer xxxxxx from San Mateo Code Enforcement. We received a complaint about an illegal in-law unit at the property that you have listed. You are going to have to pull this house off the market, until I can come out an investigate it”

My client, an Investor, purchased this house directly from the prior owner. The prior owner was facing foreclosure and had IRS tax liens against the property, so he was anxious to get out. The prior owner reported to the Investor that there had been code violations regarding the in-law structure in the past, but that he had corrected them ((I should note here that I didn’t even know the Investor at the time of the purchase or I would have verified with the City of San Mateo that the code violations were taken care of))

When the Code Enforcement Officer visited the property, he cited the In-Law structure as being completely illegal. He indicated that it did not meet current building codes and might have to be torn down. The Investor was terrified, since the In-Law structure; with its full bathroom was what really added significant value to the property. In addition to the code violation with the In-Law structure, the house was also cited for having other improvements made without permits (rear deck, remodeled kitchen, no handrails leading to the 2^nd floor, new electrical service, etc). All of these improvements had been done to code, but without the necessary city permits.

Here is where I get to brag about only doing business in a small geographic area J. Because I am so involved in the local community where I sell (eg:Rotary, Chamber of Commerce, etc), I immediately knew who to call. The person we called was not only a local Architect, but also served 2 terms on the City Planning Commission, so he knows the local ordinances and all of the people at the city. The Investor hired him to represent the property and get everything into code compliance.

The Architect did some research and found that the accessory structure met the seldom used city code definition of a Home Occupation Accessory Structure and could therefore be legalized. That meant that we did not have to tear it down. The Architect also applied for permits for all of the other work which had been done and after 2 inspections, got that approved too.

When we initially were hit with the code violations, the Buyers got scared and backed out of the transaction. After the Architect was hired, I arranged for the Buyers to meet with him, so that they could understand the City Approval Process and the timeline for getting everything approved. Feeling comfortable, now that everything was in the Architects hands, the Buyers committed to buying the house once again.

Throughout the entire 3-1/2 month approval process the buyers were kept informed and stuck with the purchase. They are happily closing escrow on their Very First Home on Tuesday.

What I have written here hardly does justice to the hundreds of phone calls, voice mails, city meetings, emails and missed deadlines that it took to put this deal together, but the Seller and Buyers are happy with the end result.

What are the lessons learned from this transaction?

· Do business with a local Realtor who specializes in an area. That way, if something goes wrong your Realtor will know who to call to resolve it.

· Don’t rely 100% on what the Seller says about the house. Verify permits and possible code violations directly with the city.