Amy Zabetakis, founding member of Rucci Law Group, provided a presentation on legal issues surrounding home purchases to realtors in the New Canaan and Darien offices of Berkshire Hathaway in early 2015. A summary of problems and how to avoid these deal killers was presented.

With the median sales price for a residential property in Darien, CT exceeding $1.5 million, the price of a residential property can far exceed the price of a commercial property in another part of the country or even the state. Problems that might have gone unnoticed or ignored in the past are causing sellers a great deal of anxiety and in the worst cases causing delays, forcing price renegotiations or ending deals after parties have already gone to contract on a sale. Unfortunately for these sellers most of these problems could have been mitigated or avoided entirely if they had been identified earlier in the process.

What Are the Problems?

  • Open building permits
  • No building permit for legal work
  • No building permit for work that violates building code or zoning regulations
  • Previously removed or abandoned oil tank
  • House or other improvements below the flood elevation

What Can You Do?

When you decide to list your home, you need to be certain either you or your contractor obtained both a permit for the work and a Certificate of Occupancy upon completion for any work that was not purely cosmetic. In particular, many attorneys will read the listing and specifically look for Certificate of Occupancy for anything you choose to describe as new.

Best practice is to check for open permits at the Building Department before you list your property. This will give you time to get any open permits closed out or to obtain a permit. Even if the process is not complete before you go to contract you will have far more time to address the problem than if you wait until the issue shows up on the Buyer’s Municipal Search. If you or a prior owner of your property did work that is in violation of the Building or Zoning Regulations you can work that fact into how you price the property and/or be prepared to offer a credit for those problems.

Another good practice is to check with the fire marshal to confirm that any paperwork on a removed oil tank was properly filed with the fire marshal and that there is no indication of remaining contaminated soil. Full removal paperwork was not routinely filed with the fire marshal until relatively recently, therefore, if the paperwork is incomplete you should check to see if you have more complete paperwork in your own files.

If your property is in the flood zone you should order an up-to-date flood elevation certificate to determine if the house conforms to the flood elevation. It is not enough to state that you do or do not have flood insurance. While flood insurance policies are transferable, buyers must have homeowner’s insurance policies in addition to flood insurance policies. We have discovered that certain insurance companies will not write homeowners insurance policies AT ALL on homes that do not conform to the flood elevation; therefore, buyers are looking for flood elevation certificates before they can begin to shop for homeowners insurance.

At the end of the day, these problemissues shouldn’t be deal stoppers but they can have a big impact on how smoothly transaction goes. You don’t want to find out at the eleventh hour that the closing needs to be delayed or a credit given because of an open building permit that existed before you purchased the property. Similarly, no one wants to hear that a buyer couldn’t get its mortgage because the property is below the flood elevation and the buyer couldn’t get insurance in place. A smooth transaction is one where the problems are identified BEFORE the parties go to contract when they can be neutralized.