All Forum Posts by: Jason A.

Now that the dust has settled figuratively and literally, it's time for an update. After a few more contractors and numerous discussions with the county the issue has finally been resolved. In some respects this post is cathartic. The total cost to remove the addition, plus carrying costs, plus permits, etc was roughly $20k. When the contractor demo'ed the addition they found noticeable termite damage which required rebuilding the length of the back of the house.
The good news is it's all done and we just funded a refi to bring our mortgage and impounds to a few hundred dollars less than anticipated rent. The house was also appraised at nearly what we purchased it at in 2008 and if we sold today we would recoup nearly all of the money we had to invest to demo the addition as opposed to foreclosure. We'd still be out nearly all of our initial investment but don't have to deal with foreclosure, impact to credit etc.
If the property can almost break even, that's good enough for me, for now, and I hope prices continue to appreciate.
Thanks for all the comments on the thread!

Originally posted by K. Marie Poe:

Jason: 2008 was still a somewhat crazy time for RE and lending, but your appraisal doesn't sound right. Did you order it? Or your lender? It's not normal for an appraisal to ignore sq. ft. that is different from assessor data, or call out an addition without noting sq. ft. I don't know what you mean by "just like any investment appraisal". It sounds like a drive-by or a BPO.

We ordered it. The appraisal is similar to other investment property appraisals that were ordered by banks on other bank owned properties that we purchased in subsequent years. 2008 was definitely a crazy time. In fact, when we tried to refinance through the bank that owns the current loan, the addition would not pass their underwriting. So even though they made the original loan, they would not underwrite that same property for a refinance in 2011.

Originally posted by K. Marie Poe:

As for footings: do you mean the entire house has no footings or just the addition? I've bought several houses with no cement or concrete foundations, sometimes not even piers, just wooden footers to the ground. Lenders in CA usually refuse to lend on that. Again, the appraisal, if there really was one, is important here.

There is likely a patio slab that the addition was built on without the proper concrete footings. The appraisal does not call attention to the patio slab or the possible lack of footings.

Originally posted by Mark D.:

Your best option would be to file for a retroactive "as-built" permit. You will need a drawing set but it will only need to be the bare minimum to get through the permitting process. There are people/companies who do this for a living. Find a good one and it will make your life easier. They will know everyone at the city and will probably be able to tell you what will need to be done to pull a permit (if possible). If you know any architects now is the time to talk to them.

If the actual construction is to code (within setbacks, lot area coverage %, etc.) this will just be a minor headache. Demolition and re-building is a major headache.

Hopefully you know or can find someone familiar with this process to guide you through it. Knowing which questions to ask the city will help as well.

Keep us updated and ask questions. There are a lot of us on the forum that have had similar dealings.

The house is within setbacks and we are ok on lot coverage, we already have verbal ok on that from the county. The reason we need an engineer is that the house does not appear to have footings. So we need drawings and engineering to retrofit because of lack of footings.

Originally posted by K. Marie Poe:

Jason: your 2008 appraisal has me stumped. Do you have the entire doc, or just a summary or cover page. I've never seen an appraisal without square footage for the subject property and all comparables. Is it an actual appraisal? Who ordered it?

As you can see, CA investors on BP really want to know what you are dealing with and how we can help. It's probably true everywhere, but dealing with muni building depts. and code compliance depts. can be so frustrating.

The appraisal has the total square footage. It is just like any investment property appraisal. It does not identify the addition square footage specifically. The addition is included in the square footage. Originally when I talked to the county they thought I should have known what was unpermitted. I told them that none of the paperwork I had (including appraisal) alerted me to the fact the house was originally a 3/1.

Originally posted by K. Marie Poe:

Your list of repairs makes it look like a gut rebuild, which is probably the job the contractor is hoping for. And it sounds like the county is stonewalling you now. You said you are $22K into the property? How much is the outstanding loan? Will the property work as a 3/1 if you demo the addition? How much work to close up where the addition was attached?

Loan is $120k, the property will not produce income as a 3/1. It would be close to a wash without accounting for vacancy and maintenance. The current bid to close up where the addition starts and demo the addition is $25k

Originally posted by Mark D.:

Not being up to code is one thing.

The completed addition not being permitted is a different story.

Have you pulled all of the permits on the house from the building department? All you need to give them is the APN number or address and they should be able to give you copies of all of the permits pulled for the given property.

You can check the cities recorded square footage of the property on this GIS site - http://assessorparcelviewer.saccounty.net/GISViewer/Default.aspx

Let us know how that compares to the current square footage.

There are no permits at the building department for the addition. The addition is roughly 800 sqft on top of the recorded 1080 sqft, for a total sqft of about 1800, as listed on the appraisal.

Originally posted by K. Marie Poe:

Whoa. You bought an REO with an appraisal that reflects total square footage including the illegal addition of 800 square feet? Are you sure? When you bought in 2008, your lender's appraiser missed the illegal addition? What does the county assessor website show for square footage today?

The appraiser noted an addition, it does not mention the size or whether or not it was permitted. There is no mention of what the original size of the house was in the appraisal, 1080 sqft. County assessor shows 1080 sqft.

The appraisal has no mention of the original square footage of the house.

Thanks for the continued in the interest in this post. Information has been difficult to get from the building department. I've talked to three levels of management and still don't have a clear picture. The original contractor also inquired on my behalf.
Nobody that I've spoken too will provide a list of deficiencies of the house. They said it is up to the contractor to provide a plan to the county and then the county will respond. I believe the first step is to have an engineer come up with plans and drawings, but I'm hesitant to go that route ($4k) until I have a better sense of what my cost might be for the rehab to code.
I agree with the other posts that the contractors bid is high. They actually only identified $67k worth of work, I added a buffer for engineering, permits etc. I'm assuming their plan is basically to rebuild in place.
I did speak with another contractor who thinks we can try and approach the problem in pieces and see if the county will sign off on each component as we go (HVAC, plumbing, electrical, roof, engineering, etc) but again I'm worried about the individual pieces adding up to a total near $60k.
Foundation $15k
Roof $5-10k
Engineering $4k
Plumbing/Electrical $10k
HVAC ?
Permits ?
Other ?

The county did indicate they would not grandfather in any of the compliance issues and were not sympathetic to my situation, despite going out of my way to be professional and courteous in my quest for information. Originally they asked for any documentation that I had that indicated the size of the house when I bought it. The title, note, and appraisal have no mention of the original size of the house. When I spoke to the county after finding this info, they were no longer interested in it.

We've been working with a contractor and just now got somewhat of a bid. It would be $25k to remove the addition and approximately $80k to bring it to code. We're still evaluating our options including foreclosure.