Buying a house with garage conversion without permits

[Ray Li]

Hi, newbie investor here. I just entered into contract for a single family house, where the seller disclosed that they converted the attached two car garage into an in-law unit without applying for the permit.

1) Is there any legal issues with buying a house with a conversion without a permit.

2) Once I buy the house, if I plan to hold it as a rental, would I need to get the permit for the conversion?

3) If I instead decide to flip the house, would I need to get the permit?

4) How easy would it be and how much would it cost to actually apply for the permit? Who would I need to contact for this? A GC or a city inspector?

The house is in Garland, Texas in the Dallas / Fort Worth metroplex area, if that matters.

Thanks,

Ray

[Jibran Najmi]

@Ray Li

This is definitely a series of questions for a licensed real estate attorney.  I can refer you to several if you email me.

I am not giving you legal advice, but in my limited experience with this, anytime I see a conversion on a property and see there were no permits filed many, many red flags go off for me.  These are just some of the questions going through my head:

1) Who did the work?  Were they licensed/bonded?

2) If the owner didn't want to pay for a permit, why would he pay for quality work?

3) If there is no permit filed, and will it pass a code inspection?

4) If the seller chose not to get a permit, what other material facts regarding the property may they be concealing?  Why did they make this choice in the first place?

Bottom line: Costs for permitting will most probably be determined within a specific locale, but if you are doing quality work, this is not something you skimp on.

I will say that I have read instances where a buyer was held responsible for bringing a conversion/addition up to current code after the seller did the work without a permit.  I would be very suspicious and ask lots of questions as to why the seller made the choices they did.