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A Past Transaction Comes Knocking

Updated: May 15, 2019

I was deliberating on what to write for this month’s article when this message popped up in my inbox from a past transaction I had handled:

A couple of years ago you represented the sellers at the subject property. The city recently did an inspection and noticed that the unit on the side of the back house was not permitted. The sellers did not disclose this on the SPQ/ TDS. The buyers are going to meet with the city building inspectors this week to go over what needs to be done to solve the issue with the unit. This is going to cost a lot of money [and] the buyers want to seek damages from the sellers. Is there anything the sellers can provide in relation to how the unit was built, permits if any, etc.?

My mind raced to recall the transaction in question. It was a property that, like many in our town, had a spotty permit history around a garage converted to living space by a previous owner, and when it came time to sell, the potential lingering liability around it became an important part of the disclosure process. I went over my files and communications and was both pleased and relieved to see a job well done. After carefully reviewing the facts, I was able to give this response:

Thank you for bringing to my attention the current situation between the City and your clients regarding the previous conversion of the garage to living space. It is important to note that the converted area was never represented to your clients as a legal third unit by the Sellers nor in the listing at the time your clients purchased the property. The property is not and has never been recognized as a triplex, which is why in the description as posted on the MLS (see attached) it was referred to strictly as a duplex.

Since the conversion of the garage was done by a previous owner, my clients had had limited knowledge of its history. As such, they were unable to make definitive statements in the TDS and SPQ as he had referenced in his email.

On the other hand, he appeared to have either forgotten or overlooked the multiple other proactive informational sources and statements which had been provided, including cautionary statements made in my Listing Agent’s Visual Inspection Disclosure, along with the Assessor’s Records provided prior to their Acceptance of the Seller’s Counter Offer.

I went on to forward many additional emails and documents that had been sent during the course of the transaction, including a full permit history search with the City regarding the legal status of the garage conversion, and invited the agent to check his old file for the very permits they were looking for.

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