A fix and flip problem

[Jorge Justi]

I started my own business flipping houses 6 months ago. So I bought a house that is my first house. When I bought the house, through my agent, the house had already had an addition in where is the kitchen. I've already fixed the house incl the kitchen. I tried to sell the house.

A person wanted to buy it with a FHA loan. When the FHA inspector went to the house, he realized that the addition doesn't have a permit. I didn't know that this addition doesn't have any permit (I mean that addition is illegal) and I either didn't know how to verify that. I'm not from the USA and I know it sounds stupid but I thought in the US every house must be legal.

Finally, the buyer told to my agent that if we don't get a permit he's going to call to the city to accuse me for the illegal addition in the house. Really, I don't know what I can do. I'm desperate. I was thinking in different opcions but I don't If they can work.

1. Go to the city and I try to explain everything and try to get a permit (I don't know if it possible)
2. Demolish the addition and build the kitchen where it should be.
3. Talk with the FHA inspector I try to explain the issue.
4. Talk with the buyer and beg :cry:

Please any advise will be great help.
Thank you.

[Brian Levredge]

You can throw options 3 and 4 out right off the bat. First thing you need to do is see about getting the kitchen permitted. You will need to talk to the local code enforcement office to see what they will require. Hopefully (depending on the quality of the work done), you won't need to open the walls to show the electrical and plumbing. This is why you always want to check with the Tax Assessor as well as the local building dept to make sure that all permits are up to date and all square footage is correct as well.