Watch for Potential Permitting Pitfalls
The North Carolina Residential Property Disclosure Form gives sellers of real property the option of disclosing the existence of room additions, structural changes, and violations of building codes and zoning ordinances, if any, or to make “no representations.” Even where a seller makes no representations, however, a real estate licensee with knowledge of any of these conditions has a duty to disclose the conditions to potential purchasers.
Room additions and structural changes, when not properly permitted, can lead to a number of potential problems. For example, on-site septic systems must be permitted, and the permit dictates the maximum number of bedrooms allowed. Real estate brokers may not represent that a dwelling serviced by an on-site septic system has more bedrooms than the maximum allowed by the permit, regardless of the actual number of bedrooms. Licensees should never assume that remodels or additions were properly permitted and should confirm with the local permit office.
North Carolina real estate professionals must also avoid making misrepresentations about the ability to make renovations or build additions onto property serviced by an on-site septic system. Representation that a basement may be finished to add additional living space or that a lot provides ample room for expansion could potentially be problematic. If a licensee knows a potential buyer intends to turn a bonus room into an additional bedroom or add a master suite that would exceed the allowable number of bedrooms, the licensee has a duty to disclose that material fact to the prospective purchaser.
Unpermitted work can raise other red flags relating to disclosures. Unpermitted square footage should be separately identified. Improvements that violate the relevant building code or zoning ordinance must be disclosed. Real estate professionals are required to make a reasonable investigation to discover material facts and are obligated to disclose material facts. Structural changes should be investigated to determine whether the work was permitted. Unpermitted work is a material fact that requires disclosure.