Regarding *unpermitted units on a triplex purchase

[Adryan Lado]

Hey guys! In a situation and wanted to throw it out there just in case anyone has some input for me!

In July, I purchased my first investment property. Listed on the MLS as a triplex.

2,000 sq ft

Main house: 2/1

Converted garage(Studio): 1/1

Studio: 1/1

Year built: 1960

Location: Ontario, California (Inland Empire)

Here’s the problem -

The neighbor filed a complaint which brought the city to do a home exterior inspection today.

He stated there is no permit in his system since the year 2000 that showcases anything on this property as being built - He says the back two units (converted garage + Studio) should not be there.

He let me know that there is a chance that there were permits pulled prior to 1999 but I’ll figure that out once I receive the county accessor document that they just mailed me today.

I called the seller’s agent immediately after. I told him you have everything listed as a triplex. Did you know these back units were un permitted? I had texted you if they were and you had said yes.

He stated that the back units were there since the Vietnam war and that the landlord originally had permits to install solar units on the back units in 2016. The installation of the solar panels were permitted and approved by the city and there would be no way they wouldn’t have seen those extra 2 units earlier as they installed the solar panels on them. 

I called my buying agent - He did not ask if they were permitted as everything was marketed as a triplex. He had also not been informed by the selling agent and there was nothing on our contract to disclose them not being permitted.

I realized I made a HUGE mistake in not verifying this information(noobie mistake) in further detail to ensure what was permitted or not.

I also realize that there is a chance that the permits were pulled prior to 1999 and everything is okay here. That’s the good news -

The bad news is everything was done with out permits and there is no record on file going back to 1960. In this situation, I would imagine that I have to demo the back units, kick out the tenants, and re-do it from scratch?

What do you think is the likely outcome here and what can I expect moving forward?