How much would you offer a previous owner for their records?

Question

I have a contract to purchase a REO property which has a number of existing violations which has a daily fine over years which is substantial (over 300K).

The fines/liens have super-priority and thus survived foreclosure. The fines will be inherited by me once closed.

The city (Hallandale Beach) has a policy where once all the violations are cleared they will release the liens with a 10% payout by investors and at 5% by owner occupants.

What makes the violations tricky is that they were cited in 2007, 2008, 2010 and the inspector who cited those violations are no longer working there. All the city had to go by were general vague wordings like "STOP ALL WORK WITHOUT PERMITS UNPERMITED PLUMBING ELECTRICAL. RETURN PROPERTY TO ORIGINAL DESIGN AND LAYOUT". The current code compliance officer couldn't tell me specifically what the violations were either, or what it used to look like because they apparently do not keep anything older than 10 years. They do not have any old plans.

So, I need to figure out what the violations were, and correct them. They wouldn't tell me you need to correct A, B, C. I had to figure them out. Normally I don't have a problem pointing out violations, but I only wish to point out what the city knows about, I don't want to point out more than necessary, if you know what I mean.

To make this even more complicated, the property has some very unusual modifications by the owner, and I have only figured out about 50% of it. There are some parts of it I wouldn't be able to figure out unless I open up walls or ceiling or send cameras down sewer drains etc...

NOW, after some efforts, I was able to locate the prior owner, the one who was responsible for all the violations. My intention to contact him was to get him to fill in many of the gaps about the work done (legal and illegal) to the property. However, he sounds like a bitter ex-owner and in no mood to help, but he did say he has plans for the current electrical and plumbing, as well as other documents, receipts to materials (such as where he bought tiles...), invoices from contractors (who did the re-roof...) and papers for all the appliances (which may or may not be handy if some of those are still under warranty...) and he says he would be willing to show them to me and give them to me for a price.

I asked what he had in mind. He wouldn't say except he has no interest to waste any time and that he is NOT doing this out of the kindness of his heart to help me, he wants to be compensated.

Sorry for being a bit long winded, but has anyone run across something like this? How much would you pay for these old documents which may or may not be useful?

To do an inspection of this property it would cost $400. To do a survey of this property it is $300. Is this documentation "cost" in the same neighborhood?

What would be a fair number to offer?

Sam Leon · Answer

@Robert Brubaker, the tricky part is that the city has no old plans, old permits and nothing older than 10 years. That makes it difficult to figure out what might have been permitted. There is a chance that a 15 year old permitted and legal construction is now deemed illegal because they don't have old permits (and I don't either). So imagine 20 windows that would have been OK now the city could say "shouldn't these be hurricane impact resistant windows?" The City can't help me. In talking to multiple compliance officers each have his/her own interpretation of what the violations "MIGHT HAVE BEEN". The original inspectors are no longer there. The new ones are working off vague statements and clauses. I cannot get any consensus from them what the violations were, they told me I might need to hire an engineer (of which I am one) and tell them what the violations are, correct them, and call for an inspection. This is highly risky as I only want to spend money on specific violations. I don't want to go through the house and tally up 75 things I need to do of which 50 of them are not necessary. Furthermore, there is also a possibility of illegal work done by the previous owner that are actually to code. but unpermitted, which I can try and legalize. His documents, plans, not yet submitted papers, contractor invoices, agreements etc...may help me to fill in some of the gaps. I had another talk with him, and went to meet with him. Unfortunately, all he would show me was a bundle of papers about two inches thick and a roll of size D plans and he wants $5000 to part way with it. I took @Ginger C. 's suggestion and offered him $20 per sheet of paper I found useful, he refused and wanted a lump sum of $5000. I said thanks but no thanks.

Sam Leon · Answer

Dawn, not really, but once the violations are clear I can negotiate the fines down by 90%. So by that time the lien payout will probably be 35K and not 350K.

Robert Brubaker · Answer

Sam I see two different directions here. If you are trying to " flesh -out" the former owner's plans his papers will help. If you are trying to get the City to " Sign-Off" on Compliance you probably will be heading in a different direction. You mentioned the order to restore to " original design layout" This suggests that the City wants no part of the "unique" modifications! The City has already "Red Tagged" the place and it's the current Officials you are going to have to please. Easiest way to go is to " bite the bullet" by having a Re-Inspection- laying out what they will accept- and using this information to decide on the merits of going forward. They don't have to show any of the "history" to determine compliance and are free to include anything else they see now that they have cited the property. What it will take to obtain a " sign-off " is what matters. Best to go to the " Source". Best for Success!

Dawn Anastasi · Answer

The property must be worth over $300k in order for you to take on that much in fines, correct?

Ginger C. · Answer

Offer him $50 per hour for his time and a set amount ($10, $25, whatever)per page you wish to purchase after viewing what he has. That way he can feel he's being compensated for his time and you are assured that you're not spending a couple hundred dollars on sharpie sketches on the back of napkins.

Sam Leon · Answer

Wayne, I can't find any more "winners" these days. All of the "distressed" ones in South Florida have their unique problems. I saw one a month ago on the MLS in Riverside Park that had a fire hazard. The realtor actually left the door wide open as the inside was all black and charred. I wasn't brave enough to touch that one. Not sure what I am willing to pay for the owner's docs. If they are truly useful I might pay a couple of hundred, but the thing is, if it's all illegal work, I doubt he would have plans and drawings. I am not going to pay for sharpie sketches on the back of bar napkins.

Wayne Brooks · Answer

View, snatch and run? Seriously Sam, you find some real winners. But if they solve the mystery, and save you a bunch of time and money, even though I Hate rewarding selfish people, you've probably got a number in mind as what you'd be willing to do. Or............refer back to the top.