Go after seller for wrong disclosure?

Question

• Cedar Hills, Utah: We closed the house in late June 2019. The house has partial-finished basement. We engaged a builder to finish the basement mid July 2019.
• After the builder submitted the plan for the un-finished part, it took the builder and the city a while to find out that the previous owner finished 3 rooms (2 bedrooms and 1 living room) without permit. 
• As we found that out, the builder looked closer to the 3 rooms and advised us to remove all the existing drywall and ceiling. Without that, he has already known 2 issues with the 3 rooms: missing fire block, wrong insulation, wrong heat duct (they open it from the existing duct that is used for the first floor – to get heat in the basement, it is wrong, it needs to have a separate duct).
• And only after removing all the drywall and ceiling, our builder will be able to tell us if there is anything more to be fixed to bring it up to code.

We finally have the certificate of occupancy for the entire basement today - after 8 months. With the extra $ we spent and the stress we went through, is it worth it to go after the previous owner? for failing to disclose that there is part of the house completed without permit? With them being in the construction line, I don't believe that they are not aware. But they can claim that they did not know they need to pull a permit?

Le Trinh · Answer

When we viewed the house, they said they did the 3 rooms but too busy to finish the rest.

'Provable' damages are what I paid the contractor extra to correct those areas - ~ $10,000. To close the topic, I decide to write the seller an email that with or without intention, they did something wrong (finish those 3 rooms without permit; did not put in fire block that endangered their family; and endangered my family). I am glad to tell them that I corrected all those. I wish they will be better in the future. Bye and have a Good Friday. To me, that email serves as a closure to me. $10,000 is not a small amount but it is lesson fee to me. Thanks everyone again

Karen Margrave · Answer

If you like to spin your wheels and waste your money, you can go after the seller, otherwise, be happy it's finished now and move on. Did anyone ask if it was permitted? Did they represent that it was? Do you have proof they knew it was unpermitted? Is it really worth it?

Matthew Paul · Answer

Come on Russell , you know States like their tax money . And they want permits pulled so they can raise your property tax . Thats the main reason for permits .

Karen Margrave · Answer

A. Have you? Maybe it wasn't them that did it, then their answer was correct.

B & C.  To your knowledge < If they didn't know about the alterations, they answered truthfully.

You can chase these rabbits for as long as you wish. In CA getting into court with someone that wants to fight it will cost nothing short of $50,000 and that would be very lucky.

QUESTION:  What were your actual "provable" damages?

Brian Van Pelt · Answer

@Le Trinh

You should consult a real estate attny IF you believe the information is correct. 8 months to finish a basement, even with those issues is excessive. You could build an entire house in that time. If the basement was unfinished when you purchased the house, it would have been easy for you to ask if a permit had been pulled for the partially finished  portion. or to check with local zoning. The big question is why didn't you ask or check prior to closing ? 3 Bedrooms and a living room in the basement is unusual.

Wayne Brooks · Answer

Is that issue, specifically permits, a required part of your state disclosure requirements?

William Hochstedler · Answer

In the seller's property condition disclosure it specifically asks if the seller's made any alterations, additions or remodels to the property.  Did they describe the improvements that were done in that section?

In Utah, there's no particular requirement to disclose whether permits were pulled.

In the very first section of Utah's terrific Buyer Due Diligence Checklist it states "Buyer is also advised to make inquiry at the local building department to determine if building permits and final inspections were obtained for any remodel work at the Property, if applicable."

If they disclosed the work, and you didn't contact the building department during your due diligence period, you should probably follow @Karen Margrave and be pleased with your upgraded new home.

We've all been there in some way or another with a lot of woulda-coulda-shoulda's.

Le Trinh · Answer

Thank you all for your replies. It helps me look at the issue from different perspectives.

Utah requires the seller to give the disclosure and per the disclosure, they answered 'No'.

According to the disclosure, there was no improvement done. It is my fault for not asking whether there is a permit?

The reason why it takes 8 months to finish: some delay in paperwork, but mainly we told our contractor that we are not in the rush as we do not want to rent it out til spring time. and due to frequent travel, we did not want people to come and work on the basement when we were away.

I would say 80% of my mind wants to move on and consider the extra money we spent as the fee for my lesson.

The other 20%: this is not right. Someone did wrong, lied about it, got caught and did not need to pay for that.

Le Trinh · Answer

Utah definitely requires permit. And the seller has 30+ years in construction and the couple owns a business in Utah. They are also from Utah. So it is impossible that they don't know this needs permit.

I understand if they did not pull permit so they pay less property taxes. But trying to finish it not up to code (fire block, insulation) is kinda unbelievable.

Russell Brazil · Answer

Why would that even need to be permitted? I do business across multiple states, and none of them would require finishing the basement to have permits.  And if it did, did they even know that it required that?

Go after seller for wrong disclosure?

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