You’ve found the perfect commercial property to invest in: it has the right number of office suites, the perfect amount of square footage, and plenty of parking spaces. It’s just what you’ve been looking for!
Before you put in an offer, it’s crucial that you get a commercial inspection and check for outstanding building permits.
It’s probably the last thing on your mind when searching for a commercial building, but penny pinchers and “DIY-ers” are notorious for incorrectly performing renovations in an effort to improve resale value while saving a few dollars.
If any of these “improvements” go south after they sell the property, it’s the buyers’ problem.
Why Commercial Building Permits Are Important
Building permits are your local government’s way of ensuring that commercial properties comply with current building codes.
Without obtaining a permit, an inexperienced owner could alter their property in a way that makes it a liability. Imagine operating a retail store with a leaky roof or improper wiring and you’ll get an idea of the risks involved in an “unpermitted” building.
Building permits in Florida are needed for:
- Construction – including renovations and additions;
- Alterations – such as re-roofing projects;
- Repairs – such as major plumbing and electrical.
Keep in mind, this is not an all-inclusive list; its intent is to make you ask questions when touring prospective commercial properties so you can get the most accurate information possible.
When Building Permits Aren’t Pulled
Construction not meeting code is something Florida building inspectors encounter every day.
There are a few reasons property owners don’t get a permit:
- Work may have been performed by non-licensed contractors;
- Property owners were unaware that permits were needed;
- Property owners couldn’t afford to complete the project to code;
- Property owners didn’t want to pay additional property taxes based on the increased value of their property.
Whether their intentions were innocent or not, property owners who didn’t pull the necessary building permits for renovations and improvements are putting future owners at risk.
The sellers should always disclose information about any unlicensed work, but in many cases, they may not know about it. If the work was done before they owned the building, they might assume that the property is completely to code.
What You Can Do
Unless you are purchasing new construction, there is always a risk that you are buying a home or commercial building that has had unlicensed work. A little bit of due diligence in the beginning will save you from a world of stress later on.
After you decide on a property, it is imperative that you get a professional commercial inspection. Commercial inspections give you an idea of the building’s current condition as well as an idea of what you can expect after ownership has been transferred to you.
An experienced building inspector should be able to tell which features are up to code and which ones fall short. If any glaring issues are discovered, there is a good chance that no commercial permits were issued.
What to Do If You Suspect Building Permits Weren’t Issued
If your inspection uncovers anything not to code, don’t move forward with the sale until the issue is resolved.
Problems surrounding building permits (or lack thereof) won’t go away when the property is sold. In fact, these issues are only transferred to the new owner, who will be held liable and required to correct the problem to comply with your local building department, as well as pay any outstanding penalties and liens on the property.
If you suspect that unpermitted work might have been done on the property, contact your local city planning department to confirm. If a building permit was required but was never obtained, obtaining a permit after the fact can be pricey—often double what they would have cost before the work was done.
The building department can also tell you if there are any open permits on the property. An outstanding permit that was never properly inspected is just as risky as unpermitted work.
Again, not every improvement or remodeling project requires a permit and rules vary between cities.
Regardless, it’s worth it to be on the right side of the law. If you are found to have unpermitted work, you could be fined on top of the costs of bringing the building to code.
Building inspections are more than just a “good idea,” they’re a way to protect your future investment and ensure that you don’t get in over your head.
Remember, there is no return policy or Lemon Law on real estate. If you inherit a $200,000+ problem from the previous owner, it’s now your problem and you will be liable for correcting it.
This is just another reason why buyers should always get a commercial building inspection from a qualified inspector.