By Monte Scott Leeper
Q.
I read with interest your article about homeowners being required to obtain a CO (certificate of occupancy) for a structure which was on the property at the time it had been acquired. This structure did not have a CO when the property was purchased. To me, this deficiency appears to have been a cloud on the title at the time the property was purchased and would definitely be one if the owners attempted to convey the property at this today. If the homeowners had purchased a Fee Title Policy at the time they acquired the property, wouldn't the cost of acquiring a CO at this time be a claim against this policy?
A.
This problem arises all too often when an owner is about to sell and first discovers, after all the years of living in their home, that structures or changes to their home never had properly recorded permits and certificates of completion. The panic that sets in is disheartening, especially when the owner has a ready buyer and is looking at a major life change. But searching for the guilty party is just another complication and, although you are right that some title insurance policies do cover this problem, not all closing papers are carefully read. In some instances, the title company has conveyed a policy, which you pay for, that protects them from being sued, leaving you to hope they will honor the responsibility of correcting their oversight. I have witnessed many times where a title company will not be involved in correcting the problem, has changed names, corporations, or simply did not offer to correct the problem in writing or by any other means.
Correcting the problem involves documentation of the construction, whether it is a shed, a deck, a second floor, or any other change to a home. This means hiring an architect or engineer, having the structure measured, drawn up, checked for structural stability and code compliance, filed with a local building department, reviewed by a plans examiner, approved, inspected, and finally issued the proper certificate of completion. It can take several months.
Along the way, code compliance and structural questions can present the most difficulty, since they are too often neglected, making the building impossible to approve without new construction to bring the existing structure up to code. The most common problems are foundations that are not deep enough, roofs that do not have the proper depth of material, windows that do not meet escape requirements, and many other glitches guaranteed to increase blood pressure. So even if a title company covers costs of the permit, the time and possible loss of sale are not covered.
