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!
But before you put in an offer, it’s important to know what you’re getting into.
It’s probably the last thing on your mind when searching for a commercial building, but unpermitted work is rampant when it comes to commercial real estate. Penny pinchers and “DIY-ers” are notorious for performing code-violating renovations and then relying on the fact that the buyer doesn’t know any better. When these “improvements” go south after they sell the property, it’s the buyers’ problem.
Buying a commercial property is a huge investment. The last thing you want is to end up with a $100,000 problem that you weren’t expecting. Here’s how to make sure you don’t get taken in by unpermitted work.
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, which means you’re both in the dark.
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 (and even then, that’s no guarantee that it’s ready to occupy). 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 code inspection. A typical commercial inspection gives you an idea of the building’s current condition as well as what you can expect after ownership has been transferred to you. Code inspections, on the other hand, are a much more exhaustive type of inspection, looking out for any code-violations which could indicate unpermitted work.
An experienced code inspector like those at BIS can tell which features of a property are up to code and which ones fall short. If any glaring issues are discovered, we can tell you before you purchase the property.
What to Do If Code Violations Are Discovered
If your inspection uncovers any code violations, don’t move forward with the sale until the issue is resolved to your satisfaction.
This could mean the seller is responsible for bringing the building up to code before ownership is transferred to you. Or it could mean walking away from the property.
Problems surrounding code violations 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.
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.