All Forum Posts by: Stephanie Phillips

Hi David:  My understanding is condition of the property.

Thank you so much!  Can you recommend an attorney who could help me?  My closing attorney is of no help.

I purchased a 4-unit building gut rehab in Chicago, with a 203k loan.The contract had an “as is” addendum.

My contractor applied for building permits with the City of Chicago building department.They were advised that the property has multiple injunctions against it, and was, in fact, in demolition court.This obstructed receipt of my permits, rehabbing my property, moving into it and receiving rents, as was my plan.

Neither the seller, nor his real estate agent disclosed this information to me.If they had, I would not have purchased the building.

The signed contract states under “General Provisions” Section “H” Code Violations:

“Seller warrants that no notice from any city, village, or other governmental authority of a dwelling code violation that currently exists on the Property has been issued and received by Seller or Seller’s agent (“Code Violation Notice”) If a Code Violation Notice is received after the Acceptance Date an or before Closing, Seller shall promptly notify Buyer of the Notice.

The Seller and his Agent both knew about these violations as the list of violations clearly correlates with his ownership of the building, but did not disclose this information to me.

The “as is” addendum does not exempt the seller or his agent from notifying me of this material fact.

This withholding of vital information violates the terms of our contract.Had I known this, I would not have purchased this building.The seller and his agent were both aware of this.

Are there any legal remedies for me? Can I make a claim against the agent's E&O?

Hi Brie:

I am new to real estate investing. Your profile and accomplishments are very impressive. Will you be moderating any REI forums in the greater Chicagoland area within the next month or so? If not do you have any recommendations for good groups to partner with?

Thank you for the questions and comments.  Here is more to the story:

How much do you owe on both the 1st and 2nd loans? I owe $101k on my SFH and $416k on my 203k rehab loan for the apartment building.

What are the payments for each? $775/mo for SFH, $2773/mo for 4Unit

How long have you had each loan? I've had the SFH for 5+ years (they worked with me on a forbearance agreement ($200/mo for 3 months). I closed on the 203k 12/19/14.

What is the value upon completion of the house? (conservative estimate, not rosy picture) Upon completion of rehab, 4Unit $450k

Do you have the money to finish your house? It will be very close, but yes. It will not be as aesthetically pleasing as I want it to be.

Are you trying to do the work yourself or are you using contractors? I have a contractor, recommended to me by my lender, 203k certified, who is helming the project.

What still needs to be done to finish the house? I just received my building permit from the city 9/11/15. The work just began yesterday, 10/7/15. As this is a total gut rehab (porch, tilting staircase, HVAC, widening windows, plumbing, et al), everything needs to be done; it is inhabitable.   4-months is the estimate for completion. 

NOTE:  The property was in demo court when I closed.  I do not remember this being mentioned as part of the closing discussion with my attorney, but he maintains that he told me about the injunction.  That added to the delays. 

I bought a vintage 4-flat in a rapidly gentrifying area.  It has taken 9-months to get building permits for my gut rehab!  My municipality is demanding changes which, in essence, is turning my project into a new construction project and I am going broke with two mortgages and no tenants.  I've gotten behind on my new mortgage and current mortgage and it's a long way to completion (4 months), and my credit has been negatively impacted.  What should I do?  HELP!!!  My dream is turning into a nightmare.