Passing Inspection Before Sale
A reader wants to know how to avoid a village-required inspection that will require updates to their property
Q: This may be a question for Sam. We live in a village that requires us to purchase transfer stamps in order to sell our home. But for us to get the stamp, we must pass a village inspection. This inspection is to verify that our home meets current building code.
The list of items they inspect is about 50 pages long. The cost to us of complying with their requirements will be thousands of dollars.
Will selling “as is” allow us to pass inspection before sale?
Why can’t we sell the home as is? Why can’t the buyer bring the home up to code? We have lived in our home for 40 years. During that time, we’ve taken reasonable care of it. If we have to make these repairs, we’ll spend money that we won’t get back in the sale.
We feel as though the village is holding us hostage. What do you think and what should we do?
Buyers can take on responsibilities to fix up property so you can pass inspection before the sale
A: Yikes! You shouldn’t feel like you’re being held hostage by your village. Have you talked to the village to see if there is a process by which the buyer can assume the obligations to bring the home up to code?
Many municipalities enact ordinances requiring sellers to pay a transfer tax for the sale of property. This is a way to raise revenue to pay for local government services. In order to sell a home, you must pay a fee to the municipality. If you don’t pay the fee, the local office that records or files real estate records will refuse to accept the deed for recording.
Passing inspection before sale allows seller to buy required transfer stamps
That will kickstart a cascade of negative after effects. If you want to sell but can’t file or record the deed, your buyer will find it impossible to engage a title company or settlement agent willing to close the deal. It will also be very tough for the buyer to find a lender willing to provide financing for the purchase. In other words, your deal will fall apart.
But some municipalities also require sellers to make repairs to the home in order to bring the home into compliance with the building regulations. It seems your village unfortunately falls into this category.
Village inspectors want to make sure home passes inspection and meets village requirements
Let’s talk about the inspection. The second part of your question involves your municipality’s requirement of a home inspection. In some communities, the local building department wants to make sure that a single family home is still a single family home. They might also want to confirm the owner has not made illegal additions or improvements to the home. The inspector makes sure there aren’t any hazardous conditions or repairs needed immediately.
While we can’t speak to every municipality’s transfer tax requirements, Sam has never seen a municipality that didn’t include a provision allowing the buyer to accept the home in its current condition, provided the buyer agrees to make all the repairs required by the municipality. In other words, you can sell your home in its “as is” condition but the buyer would have to sign documentation with the municipality agreeing to make repairs. In addition, the buyers may have to put up some money with the municipality to guarantee that they will make those repairs after closing.
Most municipalities won’t waive inspections or transfer taxes
Would a municipality waive a transfer tax? Sam has never seen that happen. Municipalities will usually place the burden of the tax payment on either the seller or the buyer. Sam has experienced some transactions where the municipal ordinance places the burden on the buyer to pay but the parties have negotiated for the seller to pay the transfer tax instead.
For your purposes, however, you should start by calling your local building department. Ask them how to sell your home in “as is” condition. Tell them you want to have the buyer assume the obligation to make any required repairs to your home. Ask them to let you know how the process works to sell your home without having to make the repairs yourself. They should be able to guide you through the process of obtaining any documents you might need.
Village inspections aren’t difficult to pass if roof is in good shape
On a separate note, you mentioned that you’ve cared for your home over the years. Do you suspect that there are issues the municipality will require you to fix? Generally, if you’ve taken good physical care of your home, the local municipality won’t require much of you as a seller. If the exterior of your home and the roof is in good shape, and you haven’t changed the interior of the home, you might find that the municipality won’t require you to do anything.
We know that there are some municipalities that strictly enforce their inspection requirements. While some towns and cities may only be looking for severe violations — an illegal conversion of a single family into a 2- or 3-family building — others can be quite picky. Their inspectors will spend time looking for any code violations or work done without permits. Fair, but you don’t know yet what your building department’s goals are.
What we’re trying to say is we don’t think you need to feel as though you’re being held hostage. Open a dialogue with your local building department. Ask them to explain their policies and the inspection requirements. Ask how you can sell in “as is” condition without being penalized. And, then ask if they can help you through the process.
If you don’t like the answers you’re given, consult with a local real estate attorney who specializes in municipal law for options and next steps. We’re hoping the reality isn’t as bad as your imagination. Let us know how it goes.
©2023 by Ilyce Glink and Samuel J. Tamkin. Distributed by Tribune Content Agency. C1615