With the economy sputtering to get restarted after the home mortgage meltdowns many cities are facing income shortfalls especially in the building departments where permits are almost non existent. To make up for the loss in income many cities have begun to target homes in foreclosure and bank owned homes. This becomes an issue for investors and home buyers alike when they purchase a property, then rehab it or occupy it and one day gets a yellow letter in the mail requiring city inspections for occupancy, fun!
More frequently than not local cities are scouring public records to find homes that are in foreclosed or bank owed state. It is really pretty easy for them to spot with all of the sheriff sales and delinquent taxes. Typically if they are vacant for 90 plus days they tag them putting them on their “hit list’ which will require the home to have a city inspection done before it can be occupied by a homeowner (see how they generate lost income). They wait and watch for it to sell to an investor or a homeowner. Many cities have actually hired personnel for just this position. Once the home has been closed on the city will often drive by the property to see if there is major working being done on the home (Hint – don’t leave a 20 yard dumpster in the yard for weeks at a time if you are renovating). If they suspect major work being done they will send over the local building inspector for a visit. It is never a good thing to have the city show up with major renovation going on and no permits for work, it’s not how you make friends. A lot of times the cities will work in partnership with the local police and DPW to keep tabs on foreclosed homes and the renovation status.
If you find yourself purchasing a foreclosed home either as an investor or a homeowner make sure to check the local city ordinances to see if they require any city certifications prior to occupancy. If you do happen to be buying in a city or town that requires inspections (if not yet they will!!) Make sure that you play by their rules; do not give them any reason to make you and your home an example. Trust me it is a lot better bringing the city inspectors in upfront rather than trying to sneak something by them. You want to make sure that when purchasing a foreclosure or bank owned home the city does not make you do any work twice because you did not get them involved.
Mark A. DiPonio
Real Estate Investor / Mentor
Http://www.themadinvestor.com
