This is based on a true story which happened recently.
Seller fixed up his condo very nicely. Seller puts the property on the market and gets an offer, which is accepted.
Buyer decides to conduct his own home inspection. He has some experience in the construction business and decides the unit is okay.
Seller's disclosures are delivered to the buyer. Seller describes in great detail the improvements made. Some of the things mentioned are:
- Electrical outlets and fixtures replaced by seller, who is not a licensed electrician, no warranties expressed or implied.
- Plumbing pipes changed from galvanized to copper by seller, who is not a licensed plumber, no warranties expressed or implied.
- Seller removed a shoji door (sliding divider) and added fixed divider wall to the studio condo, now calling it a one bedroom and listing as a one bedroom on the Oahu MLS. In the sellers disclosures he notes that he doesn't know if he needs permission from the condo association, nor did he obtain building permits.
Buyer received sellers disclosures and believes the majority of the work done by the seller should have been permitted. Buyer and buyer's agent review requirements for building permits in Honolulu. The answer is not easy. City and County building permit rules attach values to improvements in determining whether a permit is required. For example, a building permit is required "For any electrical or plumbing work that is greater than $500 in a 12 month period."
The buyer figured that the electrical and plumbing work done should be valued greater than $500. The seller figured the value was less.
Buyer continues investigation, following up with the Honolulu Department of Planning and Permitting. Buyer calls several divisions within the DPP, including:
- Building Permit Issuance
- Electrical
- Plumbing
- Building Code branch
Buyer sends sellers disclosures to the DPP for opinions in determining whether permits are required. The buyer is concerned about purchasing the property and having to remove additions later on since the work was done without a permit.
Buyer asks the seller to obtain building permits or reduce the price substantially. Seller says no.
Shortly afterwards, the DPP sends inspectors to the seller's condo. They tell the seller violations were reported and they must investigate. The seller grudgingly allows the DPP inspectors to enter the property.
Finding: Inspectors tell the seller he must remove the wall he created, which was originally a sliding shoji door. All other additions do not require a permit.
Result: The transaction is cancelled. Seller must remove the wall and then puts the property back on the market.
Observations
Some sellers put very little effort into sellers disclosures, marking off "NTMK" (not to my knowledge) on nearly everything, even if it's not true. They just want to get the document completed and get past that contingency.
Buyers appreciate thorough sellers disclosures. If the disclosures are delivered prior to the home inspection, the inspector will often take a close look at items mentioned in the disclosures.
Statements such as "I don't know if it's okay with the AOAO and I am not willing to get building permits" can become a problem for the seller.
If a buyer really wants a specific property, reporting seller violations is not a prudent tactic. The seller is likely to avoid dealing with the buyer again.
Aloha, Mike Bates
Hawaii realtor
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