Chicago Damage Assessment Inspections and Violations. HELP!!!

[John B.]

I'm a Canadian investor investing long distance in a few cities in the US. I'm having problems with these 2 properties I'm rehabbing in Chicago.

The way we approach a project like this is to get an inspector, get quotes from contractors, and do the work required to bring the house to move-in condition, without doing anything too outrageous or too fancy for the neighborhood. We have our realtor work as sort of a project manager, reporting on the progress of the work before every rehab draw.

We've been doing work on these two properties for TWO YEARS now. My contractor is slow and he's also been blaming the slowness on various city permits and inspections. Now, we have done a couple other rehabs in other states, we're by no means experts, but does the City of Chicago really normally meddle so much?

We've had numerous problems with these properties, but to keep it short, I'll keep the story to the problems that we're dealing with currently.

We thought we were finally wrapping up on these properties, when the city found out that we didn't register the buildings as vacant. We had no idea this was a requirement and our realtor didn't inform us. 

Then, they issued stop work orders until they've conducted damage assessment inspections. I'm told this is something that should've been done before the purchase, but we've never heard of this. Googling also didn't bring up anything. Investors in Chicago, is this a thing?

Now, after the inspections, the city found violations and they want us to fix many things that we didn't have in the budget. These are old properties and they want us to totally replace things that we were hoping to grandfather or repair. For example, they want the garage demoed and replaced, they want the roof replaced, and many more. We're overspending by more than $20k per house on these violations alone (not to mention regular unexpected rehab costs) and we're not sure we'll even break even anymore at this point!

1. Is damage assessment inspection a compulsory thing to do before purchasing distressed homes in Chicago?

2. How binding are their demands? If they want us to fix something, do we have to? What if we don't — does it mean we won't be able to sell the house?

At this point, I'm so stressed out that I just want this to be over. No money is worth losing sleep over, and right now we're not even sure we'll make any. We bit off more than we could chew, yes, we realize that now. So please spare me the "you should've done due diligence" talk because I can't handle it right now. Practical advice needed to get us out of this hole we dug for ourselves, please.