No CO's for finished basement/bathroom in Town of Babylon... potential problem for buyer? (apartment, mortgage)
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My wife and I are at the contract stage for a house in the Town of Babylon. We haven't signed yet. The house seemed like a straightforward deal. There are some issues identified by the inspector, but all things we're okay to deal with ourselves.
That is, until I found out that there are no CO's on the finished basement and its bathroom. Two of the BIGGER selling points for the home -- that we assumed were good to go, with current taxes based on the work done. The finished basement space is not an apartment, and wouldn't be used for one anyway. But we're concerned about the ensuing process for obtaining permits/CO's.
The issue we face -- and it's holding us back from signing -- is that the house was not represented as lacking CO's for these rooms (surprise, surprise), and we paid a bit more than we thought the house was worth because we liked the work that was done on the basement, and we had to beat out another offer. Now, we're faced with whatever issues may arise dealing with the CO's... including what we've been warned may be higher taxes than we'd like if CO's are required by our lender, and/or the town gets wind of it and decides to swing by. (Also, the house is assessed $100k lower than we'd be paying... and I'm concerned about triggering a reassessment.)
We're not sure we'd take the house if it costs more to get it (including any permit/CO and other related fees). We could have the sellers put money in escrow, but they're already signaled that they don't want anything to do with CO's for the work THAT THEY DID. Also, if the taxes go up more because of it, that adds to the already-ridiculous tax hikes we expect from the Town of Babylon each year.
Any thoughts or advice? I figured this was the best place to ask aside from our attorney, agent, and family. (Btw... attorney says the CO's should be taken care of and we should be prepared for whatever that involves, if we sign the contract... agent says don't worry about it, it won't come up... and family has mixed feelings...)
You may not be able to get a mortgage with non permitted work, so unless this is a cash deal or they can find other cash buyers, the sellers will have to deal with this at some point.
A basement bathroom is always a red flag. What's more, if there is a backup or other damage resulting from something the town owns (like a tree ripping out sewer lines) they won't consider your claim if the work is unpermitted. I know a couple of people this has happened to, believe it or not.
For a basement to be legally finished it needs to have an egress window, firewalls around the boiler and some other things depending on the town. It's not necessarily a cheap fix.
And yes, your taxes will probably go up.
If your mortgage company will allow them to escrow money for a fix, then ask for 3 times what you think it will cost. If they won't do that, I would pass. There's absolutely zero reason you should take on their problem.
Sounds like you've already got a pretty good grip on the situation and the negative outcomes.
If I was in love with the house, I would probably ask them to lower the price by the cost of the bathroom (6-10K) and have it removed. With a finished basement, I think that's the part that would have the most chance of problems.
Then when I'm ready, I'll take the savings and build the bathroom exactly to my liking.
Since you said its not an apartment, the rest of the space is pretty much a family room or home office? I can't imagine too many issues getting a CO for that. Just need to find the right people to sign off on the work.
I had a house with CO issues. Seller just put money into escrow for the COs which I did leg work to get and he paid fees, we also agreed if my taxes went up more than $500 bucks a year as a result of CO he would pay first year tax increase.
CO big deal. Unless you have a bedroom downstairs not a big issue. Also do you have a shower or tub down there? Technically if a half bath worse case you have to remove toliet.
I am shocked realtor did not tell you this. I looked at a few houses with above ground pools, finished basements and extra bathrooms and all are labeled Gifts. Meaning they have no CO and are a gift. Meaning do not suscribe value to them and if you get away with buying house with no need for a permit it is a gift but be prepared if you have to remove it.
BTW walls, and floor does not make a finished basement, it is ceilling. NO exposed beams etc. Worst case you have to take down ceiling.
BTW I closed with a dormer, two decks, third bathroom and enclosed porch all without permits with Chase. They could care less. The house appraised way more than I paid so did not matter. Plus putting down 40 percent.
I had a house with CO issues. Seller just put money into escrow for the COs which I did leg work to get and he paid fees, we also agreed if my taxes went up more than $500 bucks a year as a result of CO he would pay first year tax increase.
CO big deal. Unless you have a bedroom downstairs not a big issue. Also do you have a shower or tub down there? Technically if a half bath worse case you have to remove toliet.
I am shocked realtor did not tell you this. I looked at a few houses with above ground pools, finished basements and extra bathrooms and all are labeled Gifts. Meaning they have no CO and are a gift. Meaning do not suscribe value to them and if you get away with buying house with no need for a permit it is a gift but be prepared if you have to remove it.
BTW walls, and floor does not make a finished basement, it is ceilling. NO exposed beams etc. Worst case you have to take down ceiling.
BTW I closed with a dormer, two decks, third bathroom and enclosed porch all without permits with Chase. They could care less. The house appraised way more than I paid so did not matter. Plus putting down 40 percent.
Thanks for the info. This finished basement has a finished ceiling with high hats.
And, unfortunately, our agent did not help us understand the "big picture" with no CO's for the finished basement and bathroom... including the idea that we shouldn't put value in them (which we did). However, the sellers also did not even IMPLY that the beautifully-done basement did not have CO's... not as "gifts" or anything like that. I discovered this myself by pressing for answers (because they weren't giving any info at first).
Also, if we do something like you did for the "first year's tax increase" -- we'd still have to deal with those taxes for the following year and onward, plus these sellers don't want anything to do with the CO's...
what is in that finished basement? keep in mind kitchens are not allowed in the basement in the town of Babylon.
The finished basement is one big open room, 2/3 carpeted, 1/3 tiles. No egress windows (just those very slim wide windows, just above ground level, and very high in the basement).
Sounds like you've already got a pretty good grip on the situation and the negative outcomes.
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Since you said its not an apartment, the rest of the space is pretty much a family room or home office? I can't imagine too many issues getting a CO for that. Just need to find the right people to sign off on the work.
Our biggest concern has been the taxes going up once the CO's are obtained for the finished basement and bathroom (if we didn't remove, as you suggested). Also, that we'd be required to install an outside entrance or egress windows -- which would cost more than we would be comfortable with given that we offered a price on the higher end of what the house is worth.
This is a tough one for us..... we're considering backing out of the deal and not signing. Too much involved with obtaining the CO's with the sellers not wanting to help, and the offer price we put out there being higher than we'd consider now that we know about the CO's missing.
Yeah. Definitely don't over pay for a house with CO issues. This isn't 2001. You should be getting a huge discount to take the house off their hands.
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