<p>dstark</p>
<p>the one year rule is that if you pull a owner’s permit using “employees” to renovate the house, after completion, you cannot sell the house for one year.</p>
<p>If you hire a contractor and if the contractor pulled a permit, of course, that one year rule does not apply. </p>
<p>Normally, a permit has to be completed in 180 days, final inspection included.</p>
<p>“the one year rule is that if you pull a owner’s permit using “employees” to renovate the house, after completion, you cannot sell the house for one year.”</p>
<p>What is the definition of employees?</p>
<p>What is the definition of renovation? A certain percentage of the house?</p>
<p>How do firms get around this?</p>
<p>the definition of employees means that some or all the construction workers are not licensed in their trade.
the definition of a PERMITTED renovation is defined by local building requirements, normally, a job costing over $600 requires a permit. I may be wrong on the value, but there is a value.
When you say “firm”, do you mean contractors? IF a licensed contractor pulls a permit, that renovation job is excluded from the one year rule. It is if the “OWNER’s” name on the permit this rule applies.</p>
<p>When I say firm, I am talking along the lines of a private equity firm. </p>
<p>Looks like the one year rule is set up for contractors. Is it ever enforced?</p>
<p>here is an example of building permit requirements</p>
<p><a href=“http://www.newark.org/images/uploads/pubwks/pdfs/BuildingInspection/B-55-BuildingPermitRequirements.pdf[/url]”>http://www.newark.org/images/uploads/pubwks/pdfs/BuildingInspection/B-55-BuildingPermitRequirements.pdf</a></p>
<p>Here is a permit application where the section 7044 (one year rule) that is cited.</p>
<p><a href=“http://www.newark.org/images/uploads/pubwks/pdfs/BuildingInspection/B-1b%20Bldg%20Permit%20Worksheet.pdf[/url]”>http://www.newark.org/images/uploads/pubwks/pdfs/BuildingInspection/B-1b%20Bldg%20Permit%20Worksheet.pdf</a></p>
<p>Please note the third check box from the left column.</p>
<p>of course, dsktark, the law is to protect licensed independent contractor</p>
<p>"This “Bank” apparently knows about the one year law, so he kicked my neighbor out and hired a contractor to finish the dry walls and the interiors. They intended to sell it upon completion and split the profit. "</p>
<p>How could the bank kick the neighbor out for violating a rule that wasnt violated yet? How could a bank ever kick somebody out under the 1 year rule?</p>
<p>see, the “bank” just told my neighbor do not come to work on the job any more and I will hire a contractor to complete the job, IF you want me make the loan.</p>
<p>In this case, when the building is completed, my neighbor’s permits had passed the inspections over one year already.</p>
<p>regarding the sect 7044 enforcement, I have already discussed that before and here I am repeating my lawyer’s comments:</p>
<p>The State will not take proactive enforcement on the law, however, in a dispute, if the buyer’s lawyer use this law as a complaint, the buyer will succeed and the worst case scenario is the Purchase Agreement is voided and the seller have to return the proceeds and the buyer have to relinquish the property. </p>
<p>If the 2008 crash ever happens again, this rule will be handy for those who are interested in strategic foreclosure.</p>
<p>How long is the time period where the 1 year rule is enforceable?</p>
<p>The statue of limitation MAY BE as long as 10 years, it remains to be researched.</p>
<p>In any case, a builder’s responsibility for a renovation is 10 years.</p>
<p>Wow…</p>
<p>That is too long…</p>
<p>Maybe if it is a structural issue like a foundation… Ok.</p>
<p>NO, that is the rule and it does not have to be structural.</p>
<p>My dad and his partners built a 40 units condo in 1996. My dad’s involvement is minimal so he was not concerning. But the major builder had his sons and daughters took positions in the building and got elected to the HOA board, they stay on the board for 10 years until the statue of limitation ran out and sold all units afterwards.</p>
<p>All builders know about the statue of limitation and they have to put up reserves in all building projects so they will have money to fix the problems or face lawsuit. There are professional “frivolous law suiters” that buys into a condo just to start a law suite so they can reduce their purchase cost. In my dad’s condo there was one person just did that on water leaks in the wall and he otherwise is a very pleasant person. Came to my dad’s funeral and such.</p>
<p>Interesting story…</p>
<p>So I sell my house… The buyer can try and go after me 5 years later?</p>
<p>There is wear and tear… I cant control what is going on in that house. There are teenagers in that house.</p>
<p>No, you are not a builder. In case you applied for a OWNER’s permit before you are only liable to the extent of the permit coverage. If the contractor applied for the permit, he is liable for the permit coverage, that is why a bond for.</p>
<p>In my dad’s project, for example, they are the builder for the entire complex, they are responsible for any COMMON AREA problems. If you break your inside wall, kitchen sink or toilet, that is your problem. However, pipe in the wall is part of common area.</p>
<p>Great. Thanks.</p>
<p>
There are a few reasons why people don’t get permits/inspections - </p>
<ul>
<li><p>The permits cost money. This is sometimes significant and include costs outside of the actual permit itself, which can be expensive on its own. For example, I did an addition on my house once and since I did a permit for it I had to go to the school district and hand them a check for over $1K simply because I increased the square footage of the house. I had to go to the fire department and do the same thing only it was just a few hundred dollars.</p></li>
<li><p>The permits can be a hassle - you have to draw up plans, the plans need to be acceptable which depending on what it is might require the services of a structural engineer and other input to provide the acceptable calculations for structural components, environmentals such window area (environmental concerns - i.e. too much heat entry/escape if not done right), etc. </p></li>
<li><p>The permits can add time - it may add days or weeks to the project depending on the particular building department.</p></li>
<li><p>The inspections can add time and hassle - in many cases work must stop until what’s already done is inspected - ex: you can’t put up drywall until the framing/electrical/etc. is inspected.</p></li>
<li><p>The inspections might find your substandard work - let’s face it, many people cut corners to save time and money, even if done substandard, even when the person doing the work simply doesn’t ‘agree’ with the standard, or when they don’t really know what the standard is, and therefore don’t want an inspector potentially snooping around and catching them.</p></li>
</ul>
<p>But even though it costs some more, even irritatingly so due to stupid things like paying additional money to the school district for no good reason, I think i’s best to comply with the law and get the permits and do it right. It can also save potential expensive liability down the road.</p>
<p>For non-permitted work, if you have full disclosure at the time of sale and have the buyer sign an As IS addendum, you are 99% free of liability.</p>
<p>However, the marketability of the house maybe at issue.</p>
<p>
</p>
<p>Exactly.</p>
<p>Think of those accidents where second-story decks have collapsed under the weight of guests. Done without permits and without inspections.</p>
<p>Most of my competition has very specific AS IS amendments. I was able to view a couple of them because they were pre-loaded into the MLS to be signed by buyers with their offers. I reviewed the documents with my agent and her brokerage lawyer.</p>
<p>We created our own version and now it is part of every transaction. It doesn’t take all the liability off, but it just makes the buyer understand that it is a very old house and things aren’t perfect. I will always stand by my work and have taken care of several issues that the buyers encountered after the purchase. Usually they are issues that could not have been discovered until someone starts living in the house. Since I don’t live in the houses, I disclose very heavily that I don’t know everything that could go wrong.</p>
<p>One of the key issues with the type of houses that I buy is that drains will clog up if not used for 6 months or so. It’s just life. So, the first thing I do when I get in (if the house has been vacant for awhile) is snake and scope every line, if they are not being replaced. However, with this house we could never guess that the line was clogged all the way under the street at the city line. Luckily, the backup occurred while I was working on the house and not after the buyer’s purchased it for a couple of months. </p>
<p>And, the previous owner DID NOT disclose this ongoing drain issue… and, as I said before, he definitely knew about it. Not disclosing the issue is what borders on severe liability. He also didn’t disclose a lot of stuff that was known, such as Historical District designation. Disclosure is the key, I disclose more than you can ever imagine just to be safe. If you disclose that drain maintenance is required, the buyers really cannot come back to you a year later and complain that the city drain clogged up.</p>
<p>So, if you disclose that you repaired some water lines (as an example) without permit and invite them to have an experienced inspection, you should be OK. Doesn’t mean that some slap happy buyer isn’t going to try to sue you, but you did the best you could.</p>
<p>I had a really bad experience with one buyer who was just literally nuts. It’s a whole other story that I can share, but I don’t know if anyone is interested. Let’s just say it ended with seriously dangerous stalking, a restraining order and lots of legal fees (which he ended up having to pay).</p>