Hire a lawyer. Fast.

Uh, pay for the inspection. This kind of thing happens all the time.

Contact the local authority to have them verify that things were done to code (if they're not to code, you'll have to pay to get them that way). You'll probably have to pay close to $2,000 for all the permits and inspections from the city, plus the cost to bring things to code if you need them.

You can bring this up to try to negotiate the cost of the house down to pay for this expense.

This happened when my parents bought out current house. The basement had been finished with no permits and NOT disclosed when the house was purchased. Somehow, the county realized the house had gone from being "unfinished basement" to "finished basement" with no permits and came to check it out. Apparently, it was so badly done it was a huge fire hazard, and had to be redone.

My father called a lawyer fast and sued the pants off the assholes who sold us the house. He went after their listing agent, the shady home inspector who apparently didn't find any of these huge problems, and the homeowners themselves. We got all the money and more to fix it, and the basement should be finally done in a week or two, but it's been hellish. The people who did this to us seemed nice, with a new baby and a husband who was an oncologist at a good hospital. I hope all his coworkers know what a scumbag he was to sell us a house that could potentially burn down and kill us all.

went through something like this recently in NC. fortunately i WAS able to prove permits on the addition to my house which was done in 1975. i had to track down the original owners and get the name of the contractor.

if i hadn't been able to - local laws said that the addition would have had to be reinspected, at a cost of double the usual permitting fee, and yes that would have involved tearing holes in things to look at construction details.

also, the addition wouldn't have had to be torn down unless there was no way to bring it up to code.

there's also the insurance issue to consider - say you have a house and one room of it had work done without a permit. now a fire starts in that room. and burns down the whole house. because the fire started in an unpermitted section of the house, NONE of the fire damage is covered and you just lost everything.

if you need to get out of the contract at this point, your ace in the hole is telling the mortgage lender that you may not be able to insure the house. they will deny the loan and you will be able to walk away.

if you still want the house - don't skimp on the permits. it could come back to bite you in a big, life destroying way

Withdraw the offer and move. Atlanta, seriously?

Where I live (not in Atlanta), there is a legal differentiation between code violations and permit violations. Any subsequent owner is responsible to rectify code violations at their expense. However permit violations effectively expire when the old owner sells the home, the new owner is not responsible for taking care of past permit violations.

Granted in most cases the two go hand in hand, but the point is if it's up to code the only issue is the money that they municipality didn't get from the previous owner for the permits, and that's between those two.

Again, where I live. YMMV, IANAL, yadda yadda yadda.

Speaking of lawyers, hire one pronto.

You may not have a choice.

In order to get a mortgage, a house needs a clear title.

Issues such as these are encumberances on the title (you may be looking at a lien by the county, which would show up in the title search) - and therefore you wouldn't be able to get the title insurance required by your mortgagor.

Most real estate offers have a clause that gives the buyer an out if he/she cannot get financing.

Chances are, unless you're paying cash, your mortgage company will not let you buy this house.

By the way, buying a house is not something you should do lightly, and excitement and no sleep of your wife is a pretty lame excuse for overlooking something this big. Maybe you should slow down a bit on this whole "dream house" thing.

By the way, do you not have a real estate agent? If you do, I'd fire him or her yesterday for letting you do this.

In this real estate market, why would anyone with any degree of common sense rush into an offer on a dubious property?

1.) Fire your real estate agent for even SHOWING you this property

2.) Find an attorney and have him/her find a way to back out of the contract

3.) Go find a nice, affordable apartment

4.) Continue to rent until you gain a modicum of common sense or hell freezes over

@zigziggityzoo: PS: Where's your realtor in all this? As a buyer, it's stupid not to have one (since you don't pay, the person selling the house pays for both)... And if s/he doesn't know what to do in a situation like this, you need a new one now.

@catastrophegirl - sometimes makes typos and doesn't care: oh and:

"If your property is located inside the city limits of Atlanta, Roswell, Alpharetta, Union City, Fairburn, College Park, East Point, Palmetto or any other incorporated city, then your zoning and development matters will be handled by that jurisdiction. You may call the following numbers for help:
Atlanta - 404-330-6175"

and if it's outside the incorporated city area in fulton county:

Nick Ammons , Deputy Director, 404-612-7530

* Lee Peek, Assistant Director (Building Review & Inspections) 404-612-3011
* Dick Wilcox, Lead Engineer (Development Review) 404-612-7474
* Permitting

outside the city limits in DeKalb county:
[www.co.dekalb.ga.us]

planning and permits/general information
404-371-4915

@tastic: No need, really. They have until July 29th to back out of the offer. I'd suggest they just do that, for free. This already sounds like it's not worth the headaches -- there are plenty of other houses available throughout the country.

Aside from talking to a lawyer, you should also talk to an architect who is familiar with the area/city you are moving to. They can give you guidance and assistance on how to proceed with regards to the city.

I work for an architect (in Southern California) and know very well that codes and regulations can vary from city to city. If the house was doubled in size without permits, you really don't know how far off code compliance is until you start taring into the walls. Not only do you have to think about life safety code issues, but structural issues as well.

Have your lawyer and your real estate agent discuss this. Likely the offer was made contingent on the house clearing an engineering inspection, financing, and possibly even attorney approval of the contract.

If possible, you can have your attorney reject the contract as written. This would get you off the hook, and let you renegotiate the situation with the seller. Alternatively, just refuse to pass the engineering inspection over the inability of the inspector to verify things being built in a reasonable and safe manner (since it can't be shown that the house was built to codes at the time of the renovations).

G'luck!

@zigziggityzoo: Thou art holier.

Oh, and one other thing to mention.. Permits are there for a reason, and people circumvent them for a reason. Getting a permit isn't exactly onerous or expensive - so you should be suspicious.

There's a good chance a lot of these renovations could be not up to code, poorly built, or even dangerous.

The other thing you need to consider is resale value. You will absolutely have to bring everything in line if you ever want to sell; chances are you won't find buyers as um.. naive.. as yourself when you're trying to sell.

There are thousands of houses on there. I'd back out ASAP.

@catastrophegirl - sometimes makes typos and doesn't care:

There is certainly a scenario where it would have to be torn down, and not because of code. Zoning is a really big deal in a lot of areas, and I've seen entire houses demolished because they were found to be without proper variances, and in violation of setbacks, FAR, multifamily limits, etc. Not every situation can be fixed, and a zoning board is often much more difficult to appease than a building inspector.

The OP sounds like they might only be aware of half of their problems.

Back out. You can consult an architect for an estimate on how much it would cost to legalize the property. I will bet that it's a lot. You should back out of the contract.

@Eldritch: The problem with this is that everything was disclosed in writing to the new owners. They have no one to sue.

@Eldritch: The problem with this is that everything was disclosed in writing to the new owners. They have no one to sue.

Get out of the contract while you still can. Then you can also try to negotiate a new price afterwards based on only having half a house.

Check local city ordinance. Many cities won't even let you change title if the house does not pass inspection.

@winnabago: good point, i didn't run into a zoning problem.
i love my house but if i hadn't been able to resolve the missing permit issue, i would have walked away. the cost, hassle and time involved - having to go through all that would have made my dream house into a shell of resentment and loathing

Back out. You'll find another house. There's always another house.

@WiglyWorm: I don't think Eldritch was recounting this event for any other reason but to say that people often get work done on their homes without getting the necessary permits. He makes it clear that the situation was similar enough to the incident but different enough that there was no disclosure at all (hence the capitalization in his comment, I suppose).

This is not a big deal -

First, hire a lawyer -

Next, create a rider to the contract extending the due diligence period, or better, a contingency clause that states explicitly that the contract is dead in the water should the proper permits, etc not be granted.

Finally, include language that will require the sellers to knock the cost of the fees associated off the asking price, or alternately, they apply the amount toward your closing costs.

Good representation is everything.

All is not lost.

Whatever you do, do not hire a lawyer to protect you in what is probably the largest investment you will undertake in your life. They may charge $1,000.00 or less, but they wouldn't have spotted this and advised you to not sign the contract until the matter was resoved. The Real Estate agent who works for the seller knows this stuff and I am sure s/he will protect you, or the title agent who is interested in ownership rights and not permits will certainly step forward on your behalf. Because these people only get paid if a closing takes place, they will be very interested in holding up the process to help you.

/sarcasm off.

You said you can back out, so do it, back out. Once you do that, you can start negotiating again and figure out if this will be a problem for you or not before you commit again.

@t0ph: Besides, I am not sure about Georgia, but perhaps title wouldn't even clear?

@zigziggityzoo: I always thought that if you get a personal realtor, you should be paying them. That way they have YOUR interests at heart, not the seller's. Granted, not everyone does this (I didn't), but depending on what you're needs are, it might be a good idea.

If this is truly your dream home, and you really want to live there, then have the home inspected and get estimates to correct any permitting/code violations. You can then renegotiate from there. It seems you do have plenty of time and wiggle room to negotiate and make things right. If you run into obstacles with permitting (some states/municipalities are more hardass than others) then you can always back out with cause at that point. The only money you will have lost is the cost of the home inspection and any research time on the permitting/code process.

If, however, this discovery has left you with some serious doubts about the desireability of your purchase (it's no longer a place you think you want to live and you're concerned about the overall quality of the remodel), back out and keep looking.

Only you can say which choice is right for you. I disagree with others who say "There's always another house." I just helped a friend find a house. She sold her house and had just three weeks to close on a new home. She has lots of animals, so renting was not an option in our area. We quickly realized that the only houses on the market right now are on the market for one of two reasons 1)the house has to be sold NOW (moving, foreclosure, divorce, estate sale) or 2) the sellers are merely speculating and the homes have been on the market at the same price for months or even years. Neither situation meant that the homes were what my friend was looking for, and the definite buyers market meant that there was little selection because those who can hold onto their homes seem to be holding on for a better return. She finally found THE house. The right price, the right floorplan, the right neighborhood -- a home she would have purchased even if she wasn't under a time crunch --and the owner could close in two weeks. SOLD! For her, there was no "other house." Nothing else we looked at came close.

Again, only you can say if you're willing to invest the money and time involved in an inspection, research and negotiation.

General Warranty Deed

@zigziggityzoo: "it's stupid not to have one (since you don't pay, the person selling the house pays for both)"

This is true only if you assume that the seller does not take the commission charged by the realtor(s) into account when deciding what price they will accept for the house. On the other hand, if they want a little bit more for the house to compensate (fully or in part) for the commission you are paying for the realtor(s) at least partly.

1) Back out and don't look back. If it never had permits, it was likely never inspected, and it's a pretty safe bet it won't be up to code either. Best case scenario, you pay. Worst case, you can't take occupancy of the house until you have work done and pay and pay and pay.

2) When you DO find that next home, hire a lawyer to look over every part of the transaction. He will bring some badly-needed common sense and, evidently, reading comprehension to your side of the transaction.

I have to agree with tcp100 about buying a house is not something to do lightly. When we bought our first home, we really didn't look hard into the things that were wrong with it. That came back to bite us when we tried to sell it. Fortunately we were able to, but we lost money on it having to pay for items that we didn't catch when the owners before us sold it to us. Honestly, I would say get out of this deal if at all possible. The cost and headache to bring it up to code or get the permits will make your dream home hell, or if you decide not to do it, but buy it anyways, then try to sell later, you're just asking for a long sell and losing money on it.

Back out. Then renegotiate. A wife's excitement and your exhaustion do not suggest a decision made under the best of circumstances. In addition, this is your first go at this ordeal (ummm, process) and the chances of missteps are fairly high. It is a buyer's market - take your time.

@tcp100:

That's not entirely true. Sometimes the permit process is extremely onerous, depending on where you live. Where I live, the permit process takes months and is ridiculously expensive. Then, once you do get a permit, the inspection process drags on forever because the city doesn't have enough money to employ a reasonable number of inspectors. And to top it off, I've been in a situation more than once where the inspector tacitly inferred that I needed to grease him in order to get him to sign off on that particular phase of the job.

While I'm not saying the previous owners should have circumvented the system (especially on a project of this size), I am saying that in some cases, bypassing the system is understandable. In my city, you have to get a permit for absolutely everything, regardless of how minor. I can understand requiring permits for remodels, expansion, window replacements, re-roofs, etc. But plantings? Painting a fence? Changing screens? It's really absurd where I live. And then I get that great increase in property tax a year later!

I've been in the situation before. My city's website clearly states that a permit is not required on a re-roof if the underlying plywood is not being replaced. So I started a re-roof, and a couple of days later was served with a Stop Work notice. I printed out the page from the website, took it to the permit office, and was basically told "tough cookies, pay up". Can't fight city hall, as they say, so I ended up having to pay double the original permit fee, but I did not have to undo what work I had already done. As long as the work passes inspection, I'd bet you can pay the fees and move on.

@yesteraeon:
They can decide to accept whatever they want, but they're only going to be able to choose from the offers they get. The market determines the price, not the seller.

There's no way to determine if the new work complies with the building code by just looking at it in its current state. Much of the work that gets inspected during construction is now concealed, including the foundation, plumbing, electrical and framing. Removing much of the drywall would allow for a proper inspection of the plumbing, electrical and framing, but the foundation is another story. Any "approval" obtained at this point would be no indication of code compliance.

@Shadowman615: Got to agree with Shadowman.

You will be haggling and attempting to fix this long past the 29th and you'll be stuck. Back out now and avoid the hassle.

Withdraw the offer and walk away.

If Atlanta is anything like my city, they will make the owners or, worse, you, pay to tear out the improvements, then get all new permits to rebuild them.

My neighbors enclosed their back porch and then sold the house. At the last minute the inspector insisted they tear it out.

So, the next day the new owners moved into a house with a missing porch, and several gaping holes in the back of the house.

My wife and I were in a similar position: beautiful house, beautiful view, great location, great price. Then we talked to a very experienced agent, and he just started laughing and took us back for another look.

Like your house, the owner had done all kinds of renovations and additions without getting permits or inspections - including an illegal in-law apartment, substandard flooring that was rotting underneath the carpeting, and a big beautiful deck that was also a highway for termites into the wall studs.

The reason the owner wanted to sell was the city had gotten tired of being in a decade-long pissing match and was about to come pour cement down all the toilets and drains.

The city was so angry, the only way they would sign off on a post-sale occupancy permit was if the new buyer first put the whole building back in the original condition, which was going to run hundreds of thousands of dollars on top of the purchase price.

We, um, didn't buy that house...

@nybiker: legally, in the state i am in at least [NC,] a buyer's agent, even though they end up getting paid by the seller, is bound to look out for the buyer's interests and has a fiscal responsibility to the buyer.
i had a buyer's agent and there were signed contracts to that effect all around

@catastrophegirl - sometimes makes typos and doesn't care: @catastrophegirl - sometimes makes typos and doesn't care: City of East Point, Between downtown and the Airport: 404-270-7030 (Atlanta is probably the smallest "big city" in terms of incorporated city limits. (I assume the OP knows this, but maybe it will come up in trivia one day.)

t0ph

A voice of reason amidst this cacaphony

@hypoxia:

I couldn't agree more. Then again, if it was declared in the paperwork, they could possibly be sued for breach of contract (Disclaimer: I am not a lawyer, and I could be completely wrong) since they signed anyway.

I don't care how sleepy these people were, if I read "house was doubled in size by renovations done without permits" I wouldn't sign. Period. Signing was insanity, no matter how much they wanted the house.

Oh, and in addition to your advice, I'd also get a lawyer, and threaten litigation if the sellers even think about coming after them with litigation (scare them out of it, so to speak).

What a nightmare.

@tcp100: It's the title companies responsibility to ensure the title is clear.

Bring this to their attention (where it should be, already) and have them work it out between the seller, the city, and themselves.

It is, after all, what they are being paid for. You should, however, be willing to do some checking to ensure it was done.

Also, the seller's disclosure is not the end all. For one, you don't sign off on the disclosure until the closing is final. For two, it's definitely a point of negotiation. Figure out how much this debacle will cost you (include lawyers fees if you want) and haggle, haggle, haggle. You're at a bit of a disadvantage because you've already submitted an offer, but if they're either nice and willing to work with you, motivated, or you threaten to sic the city on them, you might get somewhere.

Also, remember, there is almost always one, if not more, option periods in the contract/offer.

[I am not a Real Estate Agent/Broker, and the one I learn from second hand is in Texas]

@KCChiefsFan: Real Estate offers in most states have an option period, and in some states many major contracts do as well.

Walk.

Houses are like buses. If you miss this one, don't sweat it. Another will be along shortly.

I just bought a house in Atlanta in January. Take my word for it, there are PLENTY to choose from around here. We wasted months trying to buy one house, only to find a MUCH better deal (and house!) literally the next day we looked.

@Shadowman615: Run further and faster than you ever have ever run. Photocopy everything, send it registered times two and spare no expense in documenting how quickly, throughly and completely you want out of this. Yesterday.

I bet Suzanne researched this.