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Question For Realtors

Posted by logic (My Page) on
Sun, Nov 1, 09 at 15:26

If a REA lists a house in a town/city that requires permits for certain home improvements, and there is such an improvement…..aka deck, second or third bathroom, finished basement, sunroom, added garage, etc. and the seller honestly admits via disclosure that he/she never obtained permits and the requisite final approvals, is the house listed and priced with those improvments included or is it listed and priced as it legally appears on the tax records?

Last but not least, is it not misleading to list a home inclusive of improvements that legally don't exist?

I ask because a friend is searching for a home. This scenario has happened with three homes in a row....listed as having various features and when asked the sellers refused to get the permits (one tried to pretend it was not required).

He will now only view homes that his agent has verified either have no improvements that would trigger a permit, or has improvements that have all the proper documentation.

He is already in the hole for one home inspection fee and a septic inspection on the first house that was found to have illegal improvements. The second time he looked at a house, but had the REA check it out before he paid for more inspections….again, no permits. Now he is gun shy, and won't even bother to look at a house until this is all found out up front.

I'm not clear how REA's get away with such misleading advertising as it such seems to be prohibited by the NAR Realtor COE.

Can anyone shed some light?

Follow-Up Postings:

RE: Question For Realtors

I'm not a realtor, but I've bought and sold houses with non permitted work done.
I only disclosed it at time of sale, not in the listing or to every prospect looking at the house.
I've never had a problem with this as a buyer or seller. One house work was done because my house was legal nonconforming, therefore I needed to wait seven years to get another permit, I didn't want to wait, so I worked with a licensed contractor without the required permit. My buyer didn't care at all, eagerly signed my disclosure.
Another very old house I bought had a second floor partially finished without permit, I finished it without a permit, the appraiser noticed the difference in sq ft, but said it is common in old houses and used the current measured sq ft.
Non permitted improvements don't bother me if I can verify it is not shoddy.

RE: Question For Realtors

It is a personal choice. Hopefully some REA's will respond.

RE: Question For Realtors

Buyer beware. While REA's aren't supposed to knowingly make false statements about a property, they aren't required to check city records for permits on every house they list. REA's are not city inspectors and cannot be expected to act as such. They can only be expected to verify information that is observable - eg there is a deck. They can't be expected to testify to the quality or legality of the construction, materials, design etc.

Depending on your state, the lack of permits for improvements may or may not be covered in the disclosure statement. If that wasn't revealed at the time the offer was accepted, your friend may be able to sue them for the expenses he incurred after that. Realistically though, unless we are talking about a lot of money, it just won't be worth hiring a lawyer etc.

RE: Question For Realtors

The absence of a permit for the work makes the quality of the work questionable -- not necessarily bad. Many people skip permitting for many reasons, including, but not limited to being cheap.

I don't consider it reasonable to ask a Realtor to pre-screen every house for non-permitted work prior to even showing; prior to making an offer - OK, since it's a personal hot button. Once an offer has been made and the inspection period begins, THEN I would find the issue relevant. If you find work that was done without a permit, spend the extra time to inspect that work extra carefully -- and if it doesn't appear up to snuff, rant, rave and demand a price adjustment then.

I certainly can't see how it's misleading to advertise 3 bathrooms if the house actually contains 3 bathrooms, or to list a deck that plainly is there.

RE: Question For Realtors

Of course that is true.

However, could a new house be sold as a house, and a mortgage issued if it was built with no permits or CO?
Why? Because, legally, it does not exist. Same for unpermitted additions, etc. The house is as the CO states form a legal standpoint.

That established, the above is precisley the problem....the work could be top notch...or horrendous...there is no way for a buyer to know the quality of the work behind the walls...nor can that be determined via a home inspection as they (HI's) don't have x-ray vision.

That means that if they buy without the approvals in hand, if anything happens (damage, injury or even death) due to a fault with the improvement they are liable. Not to mention that they risk their own safety, that of visitors, as well as getting stuck with the issue if and when they should wish to sell...or, make additional improvements with permits, as the illegal work will surely be discovered.

And, in court, "I don't know is not defensible". However, proof of town approval most definitely is defensible.

Back to the REA's. In all three cases the sellers DISCLOSED that they did not obtain permits, so this was known to the REA's when the homes were listed.

Second...the CO reflects what was there...not what is NOW there. Let's say for arguments sake that it is a garage converted to laving space...that is not legal at all in some towns. The extra space would actually have to be converted back to a garage if permits were obtained.......meaning the house has one less room. Same for a basement bedroom..or bedrooms.

That is why IMO it is misleading to list a house as having something that may not be even legal to have.

In NJ, as of 2004, law requires the REA to check this stuff out....apparently that is ignored.

Last but not least, the REA COE prohibits the practice as well.

That said, I am trying to understand why so many REA's flaunt the the expense of the buyer...and what could be done to make the process more transprent for the buyer.

RE: Question For Realtors

In my area its fairly common for people to have done additions, sheds, pools, etc years ago and not gotten permits for them. Alot of people are unsure of when a permit is required and that many more don't want to get the permits for fear of their taxes going up. They don't think into the future of when its time to sell. That being said, real estate agents are not code enforcement officers. The only thing we can do when it is disclosed that sellers don't have the necessary CO's is have them go to the town and start the process to get them. If the house has 3 bathrooms and the tax record indicates 2 bathrooms, it gets listed as a 3 bathroom home, its priced as a 3 bathroom home. The seller has to have that CO prior to closing. I'm not clear on why your friend backed out of the deal because it didnt have the CO. In my area, the house has to be brought up to code before the closing at the sellers expense.(for those additions that were done without the permit) It delays the closing and its a rush to get inspections and repairs prior to closing, but in the end, the buyer gets what he is paying for.

RE: Question For Realtors

I have held off listing a house, where the owner was willing to obtain permits after the fact.
All permits here are just one computer click away for every residence in the county, so every buyer can easily find if permits were pulled.
Our property disclosure requires the seller to disclose if any work has been done that requires a permit.
I see no problem listing a house where the seller has disclosed that unpermitted work has been done. Usually the price will reflect it or it will be a contract negotiation between buyer and seller. The key point is disclosure to the buyer, once that is done, there is no reason to not let the buyer make their own decision.
Some buyers are contractors who can deal with problems like that, others probably should consult a contractor prior/during the inspection period.

RE: Question For Realtors

You said the unpermitted work was disclosed to the buyer. So, he knew going into the deal. He can ask the seller to get it permitted, and they can do it or not. Then the Buyer can proceed or not.
All us agents can do is ask the sellers if they permitted it, and then it is up to the buyers agent to verify.
In this buyers market, it sounds suspicious that all three sellers refused to permit the work in order to keep the deal together.

RE: Question For Realtors

In NJ, homes in the price range that my friend is looking are selling within a couple of weeks on the market...especially in the area in question..very commutable to NYC.

In addition, my friend was hoping to close by 11.30, in order to be assured of the tax credit...which still has not been extended and the REA's have really thrown a monkey wrench into the ability to do so by listing these properties deceptively.

Of course the REA can't force a seller to get permits. However, witholding that information is deceptive and unethical, and extremely disrespectful to the buyer in terms of their pocket and their time.

I don't understand how they get away with such practice.
If they are going to list a property inclusive of the improvements, then they should state "3 bathrooms, one without permits/final approvals, finished basement, without permits/final approvals.Then the buyer can choose to pass on those homes, and only spend their time looking at those that have no violations.

Clearly NJ law and the Realtor COE agrees. Question is, why don't REA's?

NJ law states as follows:

"(c) A real estate licensee shall not be subject to punitive damages, attorneys fees, or both under N.J.S.A. 56:8-19 for the communication of any false, misleading or deceptive information to a buyer which had been provided to the real estate licensee by or on behalf of the seller of real estate located in the State of New Jersey if the real estate licensee:

1. Had no actual knowledge of the false, misleading or deceptive character of the information; and

2. Made a reasonable and diligent inquiry to ascertain whether the information is of a false, misleading or deceptive character....

...The real estate broker/broker-salesperson/salesperson also confirms that he or she visually inspected the property with reasonable diligence to ascertain the accuracy of the information disclosed by the seller, prior to providing a copy of the property disclosure statement to the buyer...."

And, the National Realtor Code of Ethics states as follows:

Article 12
REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations.
Standard of Practice 12-8

The obligation to present a true picture in representations to the public includes information presented, provided, or displayed on REALTORS®’ websites. REALTORS® shall use reasonable efforts to ensure that information on their websites is current. When it becomes apparent that information on a REALTOR®’s website is no longer current or accurate, REALTORS® shall promptly take corrective action. (Adopted 1/07)
Standard of Practice 12-10

REALTORS®’ obligation to present a true picture in their advertising and representations to the public includes the URLs and domain names they use, and prohibits REALTORS® from:
engaging in deceptive or unauthorized framing of real estate brokerage websites;

manipulating (e.g., presenting content developed by others) listing content in any way that produces a deceptive or misleading result; or

deceptively using metatags, keywords or other devices/methods to direct, drive, or divert Internet traffic, or to otherwise mislead consumers. (Adopted 1/07)"

There is no expectation that REA's need to be code or home inspectors...just to perform standard and reasonable due diligence.

RE: Question For Realtors

In addition, my friend was hoping to close by 11.30, in order to be assured of the tax credit...which still has not been extended and the REA's have really thrown a monkey wrench into the ability to do so by listing these properties deceptively.

Had your friend stuck with the first house that didnt have a CO, the matter most likely would have been cleared up by now. Its easy to blame "deceptive agents", the fact is, there is no way to know all the changes that were made to a house over the course of many years without doing a title/municipal search. That is the reason these searches are done prior to closing. Your friend is lucky to have found an agent who would go thru the trouble of checking for permits for every house he is being shown. What a complete waste of time. Perhaps a better solution would have been to check for permits on homes he was actually interested in. Seems he needs to take some responsbility for the timing of things himself.

RE: Question For Realtors

linda117, I never said the first house did not have a CO. It has a CO. Just not a CO inclusive of the improvements...because he made them AFTER he bought the house.. Get it now?

The lack of permits came out during the home inspection….. which coupled with the septic inspection, put the buyer in the hole for almost 2K. The seller that day admitted to having no permits, and chose to kill the deal as opposed to getting the permits and finals. The house is still on the market.

The friend now wiser after that ONE experience. So, the friend asked for disclosure after seeing another house that fit the bill. This time seller disclosed no permits. Also refuses to get them...does not want to get dinged with back taxes. Another waste of the buyer’s time, and ability to meet the 11.30.09 deadline.

I find it therefore very hard to believe that the REA's are not wiser, after hundreds of experiences...unless they are all morons...which we know is NOT the case.

In addition, it takes 7 business days for the township to provide an answer as to whether or not there is a permit for the work on file. The REA could save everyone a lot of time and headaches up front if they did the research first…as required by law.

Now as it stands, in the case of a lying seller, the buyer has to wait over a week to find out if the work is legal because of attitudes such as yours.

Ass backwards…….plain and simple, and has no benefit whatsoever to the buyer…only the exact opposite.

The REA’s who operate like this are knowingly and intentionally flouting the law and the REA COE for their own benefit. Buyer is caveat emptor.

Apparently, in accordance with your take on the issue, working with an REA only serves to give the address and contact name to see the property…otherwise, buyers are on their own.


berniek, your approach is the professional approach.

RE: Question For Realtors

"In addition, it takes 7 business days for the township to provide an answer as to whether or not there is a permit for the work on file. The REA could save everyone a lot of time and headaches up front if they did the research first…as required by law."

You need to place the responsibilities on your building dept. not the agent, to provide timely information, they must still live in the dark ages. (see ours in the link below)
It's like holding the salesperson responsible for the lead paint toys they are selling, it does not make sense.
Also, what is "reasonable diligence"? Do they give examples?
What are the agents responsibilities and limits to verify the truthfulness of the sellers disclosures?
It sounds like a law that tries to make an agent responsible for something the seller should be and the buyer has their own due diligence period for.

Sorry I asked, I know it's a NJ thing.

Here is a link that might be useful: Building Dept.

RE: Question For Realtors

berniek: "Sorry I asked, I know it's a NJ thing."

I think it is more of a population thing. I see that there are fewer than 6,000 people in your town. Many NJ towns have in excess of 100, is the case with the town in I imagine that has a lot to do with the time factor.
My town, by comparison, is the size of your town. One email or phone call, and the info is supplied right away...or within hours at most.

That said, the toy lead paint analogy is not relevant, as there is no way for a toy salesperson to determine if the paint is lead or not unless each toy is tested by a scientific process. There is no public record to be checked for accuracy.

That said, the REA is being made responsible for the listing content. After all, if the seller tells the REA that the house uses zero electricity and zero fuel for heat, and that a house that appears to have been built in the 1920’s was built in 1980, is the REA going to verify if any of this is true…or do they just blithely take the sellers word for everything? If so, again as I said, what then is the point of working with an REA (except of course getting the addresses and contact names of the homes for sale) if their only function is to what boils down to simply acting as a secretary in taking dictation from the seller?

In this case, the information IS available. After all, it seems the REA’s must verify some of the things listed…such as year built, utilities, school districts, type of construction, etc…

This is how I see it working. It really is very simple.

REA meets with seller. REA sees finished basement, more bathrooms than is common for the home style in question in that town. REA sees a deck...maybe an in ground pool...finished attic space…
REA asks seller if there are permits and approvals for any improvements. If seller says yes, he should be required to produce them and copies of all finals should be kept in the file of the listing.

If seller states he bought the house with the improvements in place and assumes there were permits, the REA can require the seller to verify and produce documentation if he wants the house listed with the improvements and priced to reflect such. If he hems, haws, or stalls on doing so, the REA then contacts the town and requests the info before listing…then lists according to fact…and not according to falsehood.

If the improvements are illegal, the house is listed without them...price adjusted accordingly...or with them, with a notation that there are no final approvals.
In the interim the seller can either obtain the approvals and the listing can be updated as soon as they are finalized...or the seller can take his chances that he can sell anyway to a buyer who is at least informed and can decide to look at the house regardless, make an offer regardless, spend money in inspections and attorney fees regardless, all based upon fact rather than deception. Far better than the bait and switch any day. What a concept.

Once again…its not rocket science.

End of story.

RE: Question For Realtors

A few years ago, I was interested in a property with a separate "mother-in-law" apartment built over the garage. The owner of the home was a local contractor and stated that all had been permitted. He did state that the zoning would not allow it to be used as a rental.

When I visited the city hall, I was told that the apartment was not only not permitted, but it violated city code. I told them that I did not plan on renting it, but would like to have it used only by family members. They said that with the city code, the apartment could not have a stove. So, in order to rectify the violation, the electric would have to be altered so that an electric stove could not be used in the building, the stove would have to be removed, and I would have to sign a covenant that it would not be "lived" in.

It would have been nice if my buyers's agent had discovered this information, before I had invested time and energy in finding out about it.

Needless, to say, I moved on.
Good luck

RE: Question For Realtors

And there you have it...IMO, no matter how you spin it, deceptive listings...whether they are the result of being too lazy to ascertain the facts, or done purposely to deceive...are simply indefensible.

Sadly, none of the explanations supplied here disprove that analysis.

RE: Question For Realtors

linda117, I never said the first house did not have a CO. It has a CO. Just not a CO inclusive of the improvements...because he made them AFTER he bought the house.. Get it now?

I got it the first time around thank you very much. In my area "THE CO FOR IMPROVEMENTS IS CALLED THE SAME THING". A CO FOR THE IMPROVEMENTS. You are asking a "broad question" that varies from town to town and state to state.

In addition, it takes 7 business days for the township to provide an answer as to whether or not there is a permit for the work on file. The REA could save everyone a lot of time and headaches up front if they did the research first…as required by law.

Again, may be how its done in NJ, but certainly not everywhere. I wish it was that easy in my area to verify permits and "COs".

Now as it stands, in the case of a lying seller, the buyer has to wait over a week to find out if the work is legal because of attitudes such as yours.

Has nothing to do with attitude LOGIC, has everything to do with protocol of how things are done in my area and whose job it is. Just like YOU STATED SEVERAL TIMES BEFORE, realtors are not home inspectors. They are not code enforcement offices, they are not title researchers. There are alot of other jobs being done here that have NOTHING to do with the real estate agent. GET IT NOW?

RE: Question For Realtors

Obviously this situation has put a bee in your bonnet, logic. However, you are blatantly misreading the law and trying to create a responsibility for agents where none exists. Sure, it would be great if everyone were forthcoming, but that isn't the reality AND there are very narrowly tailored laws about exactly what a seller needs to disclose and when it needs to be disclosed. Ultimately, it is the buyers responsibility to check out the property they are buying. That is why buyers need to/should always get inspections, get surveys, get termite inspections, do title searches, have lawyers look at the contract, double check the schools/zone, double check permits, etc. Maybe you long for an ideal world where hundred thousand dollar transactions can be done with a smile and a handshake, but that just isn't realistic.

RE: Question For Realtors

Yes, blame the realtors..And blame the brokerage companies when you buy a stock(on your own advice)and it goes bankrupt... And blame the Mortgage companies when you realize you could NEVER had afforded the home,when rates adjust...People need to be responsible for their own actions...

RE: Question For Realtors

"I think it is more of a population thing. I see that there are fewer than 6,000 people in your town."

I think you overlooked 2 zeroes, there are over 600,000 in our metro area of Colo. Spgs.

RE: Question For Realtors

I listed my house in June and contacted three different agencies to meet with. Each agent met at my house (different days) and had already gone to my Town Hall to check on permits. They hadn't even been inside my house. All mentioned that a permit for my sunroom was not there and expressed concern and asked me to contact the Town to verify that the permit was there. I was surprised and called the Town immediately. I knew there should be a permit. After many phone calls to the Town Building Department, the permit was located. They explained that the permit was there but was never 'posted.'

After signing a contract with one Realtor, she then investigated my assessment regarding taxes. We had grieved our taxes the year before and the Town lowered our assessed value but we didn't know what our taxes would be. She would not list the house until she had firm proof about the taxes. I have a great agent who has handled so many things, both big and small. We have an agreed offer and she has worked closely with the buyers agent to settle pricing, closing dates and inspections.

I guess we were lucky...


RE: Question For Realtors

jane ny, thanks for the you have demonstrated that there are indeed REA's out there who actually not only understand what their job is...but actually do their job as well.

linda1117 you are the one that used a phrase common to your area, not I. That said, perhaps the next time you could be more specific, since you are aware that terminology varies form state to state.

And yes, REA's are not code officials……or home inspectors.

However, if researching is not part of their job...what is? How exactly do YOU comply with Article 12 without doing any research?

If a REA is not going to perform any research, then they are simply nothing more than copy clerks, parroting what the seller has told them, whose only purpose is to provide the contact names and addresses for the listed homes.

billl…..the bee appears to be in your bonnnet...not mine.

Fact: in NJ if the REA knowingly misrepresents and/or does not perform due diligence, they are liable to be charged with consumer fraud once discovered.

Performing their due diligence in verifying that what the seller has told them about the house is accurate PROTECTS them from being charged with consumer fraud in the event of a complaint.

I am not "misreading the law". This was enacted by the Division of Consumer Affairs (which is under the auspices of the State AG office) in 2004, and NOT the Banking and Insurance Commission, which is the NJ entity that actually licenses REA's, because this was apparently a widespread problem in terms of consumer protection and consumer fraud...and the RE Commission was apparently turning a blind eye.

It is supposed to be an incentive for the REA's to play the game fairly and honestly.

However, sadly there is clearly minimal enforcement. That said, in the event of a lawsuit or even a complaint, such flouting of the law will position them for treble damages in terms of consumer fraud.

And, it is of course the buyer’s responsibility to check out the property via professional inspections. However, please tell me which inspector has the job of checking up on the listing to see if the agent was negligent (or blatently lied) in obtaining the facts a about illegal improvements?

The buyer is entitled to receive accurate listing info….not bait and switch. The buyer is not a "mark" to be duped at any cost, and I find it appalling that some seem to think otherwise.

That said...

jane ny had an agent who did their friends agent researches the homes that she lists (the problem has been with listing of other agents) and FWIW, on an episode of Real Estate Intervention that I caught this morning, the REA said to the owner/seller, "you can use the basement as a bedroom, but it can't be advertised as a bedroom, as it has no second means of egress."

Point is, there are REA's who can be trusted.

Qdwag (or should I say qdog) when you have something informative to say, I’ll be happy to comment.

Berniek, I did miss some zeros apparently…but it seems like the pop is 380,000 or so, not 600,000…

Anyway…they are to be applauded on their amazing website. Very well done. Here in NJ, the money that could have been used to create one like CS, is probably in someone’s pocket.

RE: Question For Realtors

if Logic and i EVER agree,i'm buying 1st round..You,my advisary,are so wrong on job responsibility that it amazes me..In NJ,where i formerly resided(and allegedly they let you live there,though definitely not in my old 'hood),my attorney would have found the issues you moan about..Where i currently reside,lawyers are not involved in closings,and buyer beware..You get what you pay for or what you don't pay for...Pay for an attorney ,and the problems Logic complains about, don't happen..Don't blame the realtors...


Logic says "Many NJ towns have in excess of 100, is the case with the town in question..

What a crock.
As of the United States 2000 Census, only four municipalities had populations in excess of 100,000. With the 2004 Census estimate, Woodbridge briefly surpassed Edison in population, as both joined the 100,000 club. The 2006 Census estimate states that both Edison and Woodbridge Township have dropped below the 100,000 mark (with Edison surpassing Woodbridge).

so let's say that doubled,which likley didn;t happen..It surely is MANY...might be described as very few..PLEASE GET YOUR FACTS CORRECT,


None of the towns listed with populations of 100k in NJ, are even worth living in,if you have a choice

RE: Question For Realtors

qdwag/qdog: "Pay for an attorney ,and the problems Logic complains about, don't happen..Don't blame the realtors..."

Hmmm. Pay to find out that you you are the victim of consumer fraud. Sounds a lot like those scams where predators prey upon the elderly, asking them to send money in order to get their prize winnings.

That said, maybe you should start another thread titled "Lets Nitpick Population Stats", since it is of such interest to you.

In doing so, you may want to consider that the census is only a general idea of the number of residents as the census only reports the people whom they count. Every town throughout the country has people who are never counted....MANY people. And many towns in NJ are close to the 100,000 mark...which means that in actuality, they are over that number.

I'm not that familiar with Edison....which their website states a population of 101,400, or Woodbridge, with their website stating that they have 100,421, but since you are focused on them, you better put in a call to them first thing Monday to pontificate on your corrections. Let us know how that works out for you.

qdwag/qdog: "None of the towns listed with populations of 100k in NJ, are even worth living in,if you have a choice"

Well, Edison for one, which you sited above, is #35 on Money's best towns to live in 2008.

That said, unless you live in Abington PA, your town is not even on the list.

What town is that by the way?

Here is a link that might be useful: Best Places to LiveMoney's list of America's best small cities

RE: Question For Realtors

Lived in Northern Bergen County for decades,and Edison can't compare at all...And i don't think there is 1 town with 100k population ,so your rant about MANY towns in NJ with populations of 100k is not even close..A handful? yes,more then that,no..

And FWIW, Money magazine has ranked several towns i have lived in in there annual rankings.One was in the top 20 not that that means a thing..

RE: Question For Realtors

Speaking of best places and populations. Remember, I said "Metro Area", there is a difference, and yes, we are above 600,000 in population.

Here is a link that might be useful: Best Places...

RE: Question For Realtors

Qdwag: "And FWIW, Money magazine has ranked several towns i have lived in in there annual rankings.One was in the top 20 not that that means a thing..'

Bully for you!

Berniek, I think you are risking upsetting qdwag with that "metro area" stuff. You see, if we consider the Metro area of most NJ towns, they are the metro area of NYC...the possibilites are endless in terms of population numbers.
That will really rock qdwag's boat!

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