“What should I do if I have a listing that has unpermitted improvements?”
It’s a question I get asked all the time. Realtors know to look out for unpermitted improvements, but it can be confusing about what to do in that situation to protect yourself and the Seller.
Both the FR/BAR and NABOR contracts contain language regarding unpermitted improvements.
The NABOR contract states: Seller does not know of any improvements to the Property which were made without proper permit(s) or certificate(s) of occupancy/substantial completion (where required) or of any existing violations of local ordinances or codes, or of any pending code enforcement violations or proceedings affecting the Property.
The FR/BAR contract states: “Except as may have been disclosed by Seller to Buyer in a written disclosure, Seller does not know of any improvements made to the Property which were made without required permits or made pursuant to permits which have not been properly closed or otherwise disposed of pursuant to Section 553.79, F.S. If Seller identifies permits which have not been closed or improvements which were not permitted, then Seller shall promptly deliver to Buyer all plans, written documentation or other information in Seller’s possession, knowledge, or control relating to improvements to the Property which are the subject of such open permits or unpermitted improvements.”
In both contracts, the Seller is representing that there are no permitting issues. However, if there are improvements on the Property that were done without proper permits or there was a permit but it was never closed because there was no inspection done, the Seller could be in breach of contract if they knew about it but didn’t disclose it to the Buyer. A Seller is obligated by Florida law to disclose to a Buyer all known facts or conditions that materially affect the value of the Property which are not readily observable by a Buyer.
In this situation, there are two things the Listing Agent should do:
1. In the Other Terms & Conditions section at the end of the Sales Contract, have the Seller disclose what was done without a permit or without an inspection; and 2. Make sure the Seller fills out a Seller’s Disclosure Statement completely and includes the information about the unpermitted improvements.
Importantly, Florida law also requires a Listing Agent to disclose any facts they are aware of that may affect the value of the property – which includes unpermitted improvements. Listing Agents are NOT required to investigate the property themselves. Agents can rely on what the Seller tells them about the property, unless the Agent knows that the Seller is being untruthful. Listing Agents should always recommend in writing that their sellers use a Seller’s Property Disclosure.
When dealing with unpermitted improvements, if you are aware of something that the Seller hasn’t mentioned on the form, or are not sure what to disclose, you should discuss the situation with your broker or with an experienced real estate attorney. Please feel free to contact me if you have any questions about unpermitted improvements. I am reachable 24/7 at 239-784-5556 or [email protected].