Purchasing a property with illegal bathroom

[Carlos Rodrigues]

Okay I know I asked a different question earlier but I have another one considering anther situation. So this Multi I want to offer in Kearny New Jersey (NJ) has an illegal finished bathroom in the basement and finished rooms. So when it comes down to property inspections and appraisal what will or could happen when they catch the illegal bathroom and finished rooms? What can the seller do to get away with it?

Thank you in advance!!

[Chris Mason]

Hi @Carlos Rodrigues,

Realistically, it's unlikely that sellers will get permits while in escrow. That could be thousands of dollars, and you might not even close, so they just wasted several grand for no reason. At least that is my experience in my market, where almost everything is 60+ years old and has un-permitted illegal work.

If you just want to close on time with minimal hassle?

With seller's permission: Unscrew the shower head and put it on shower floor. Take the toilet out without damaging it, put a sanitary cover over waste hole, put toilet on shower floor. Put an upside down box over toilet and shower head. Put shower door in another room. Put a bunch of boxes and crap in that newly converted storage closet. There, now it will appraise as a FORMERLY illegal bathroom, current storage closet (appraisals are about the CURRENT property, not speculation about what the property might once have been historically). 

It's not fraud or anything because you are, in fact and in reality, converting it into something that is not a bathroom and doesn't require any permits. The storage closet is storing a shower head, a toilet, and whatever else you threw in there. That's what storage closets are for. Storing things.

Even if the appraiser risked his license by not calling the bathroom out (why would an appraiser take that risk?), it's still highly unlikely that an appraiser would have given value to this bathroom in any case, so we're not losing anything from an appraised value standpoint.

Seller should be more than OK with it once you educate them on the fact that of all the offers they are evaluating, yours is the only one willing and able to execute a plan to close on-time, without delay, in spite of the flagrantly illegal and unpermitted bathroom. There, you just set your offer apart in what might otherwise have been a crowded field of offers.