Purchased an existing home after closing the township contacted us saying the previous owner failed to get the necessary permits for a basement remodel. What should we do?

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Purchased an existing home after closing the township contacted us saying the previous owner failed to get the necessary permits for a basement remodel. What should we do?

Former owner was the original owner and the listing did not disclose any unpermitted work. Several months after closing the township contact us the new owners saying in reviewing the listing photo’s they determined that permits had not been obtained for the finishing of the basement.

Asked on September 19, 2016 under Real Estate Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

If--as is very likely--the former owners knew or reasonably should have known that they did not get the necessary permits but nonetheless did not disclose that fact to you, they likely committed fraud: they misrepresented (lied about) a material (important) fact to get you to go through with the sale at the price they wanted. You could sue them for the cost to get the permits (e.g. redo work and get reinspected, as necessary) or for the diminution in home value, if some of the work can't get permitted and you have lost space or functionality. A good idea would be to hire an attorney to help you sue them--making out fraud cases can be surprising difficult, because fraud is generally oddly technical or specific in what you have to allege or plead.
About the only reasonable way the sellers might not be liable is if they honestly and with good cause thought the work was permitted: e.g. they had hired a contractor to do the work and get the permits, and the contractor lied to them (and possibly produced false permits) about getting it permitted. But let them try to claim and prove that--based on what you write, you most liekly should sue them.


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