On October 31, 2021 I updated this post for the new, version (6), of the FAR BAR As-Is changes. The AS-IS clause 12a did not change but the permits clause did slightly BUT it really does not affect how permits are handled in the last version of the Contract.

I also did THIS post on Buying or Selling a home with non permitted work. But for this post we are assuming that the property is under contract and is using the most recent Far Bar As-Is contract.

Sometimes there’s a building permit (or many) that were pulled by the current, or former owner, that was not properly closed. Or, there was work done at the property which should have been permitted but it was not.

First, if the Owner or their agent has knowledge of any of these cases then they are required to disclose it to the Buyer. AND, the Contract states in it that:

Second, and again assuming we are using the Far Bar As-Is, Section 12 basically states that if the Buyer does NOT cancel the Contract then they are accepting the property with any permit issues:

So basically, the Seller/Agent is required to disclose any permitting issues and assist the Buyer in closing any permits but are NOT required to spend any money to do this.

Here’s the problem. Most Sellers have no idea there are open permits, or work that would have required a permit, during the Inspection Period. Now a good inspector should be able to tell a Buyer: “This looks new and it would require a permit…you should check.” But most Buyers do not look for open permits DURING the inspection period as they should. These are often found when the Title Agent requests Municipal Lien Certificates (MLC’s) from the local town and these come back showing open permit(s). But by then we are a week or so before the Closing. It’s silly they even do this because it does not affect title but they do it anyway. Bottom line, walk around the house and look for anything that has changed since the property was first built. Ask: Did that require a permit? Was one pulled? Was it closed? The trust but verify and Look for open permits DURING THE INSPECTION PERIOD.

Or, and this is what many agents are doing now, include some language in the Contract that addresses 1) Closing open permits and maybe even 2) Pulling a permit for work which should have been permitted but was not. These are a few example of the verbiage I’ve seen but none of it, looks anyway, to have been drafted by a lawyer:

Section 12 of the Contract is modified as follows to provide for the Buyers inspection of open and/or expired building permits at the Property. Section 12C of the Contract is deleted and replaced as follows: At least 10 days prior to the Closing Date the Buyer may notify the Seller of any open permits and/or expired permits or non permitted work. In the event of any open and/or unexpired Permits the Seller shall, at the Sellers sole expense, Close or finalize these permits prior to the Closing Date. In the event of any work performed at the Property which would require a building permit then the Seller may, at their option, have such work properly permitted, at their sole expense, prior to the Closing Date. Should the Seller choose not to permit any work which would otherwise require a permit then the Buyer may have the option of cancelling the Contract between both parties and all Escrowed Funds shall be immediately returned to the Buyer.

And, another one:

Notwithstanding any provision herein to the contrary, the parties agree that Seller will, prior to closing, at Seller’s expense, close all open or expired permits and will remedy any violation of governmental, building, environmental, and safety codes, restrictions or requirements, including improvements made without permits. Seller shall deliver to Buyer evidence of compliance by providing final and specific governmental approvals no later than 5 days before closing. In the event Seller is unable to bring the property into compliance prior to closing, the closing will be extended for up to 10 days in order to obtain all governmental approvals, failing which the parties may thereafter elect to extend the closing date, or terminate this Contract. In the event this Contract is terminated, the Deposit paid shall be returned to Buyer, thereupon Buyer and Seller shall be released of all further obligations under this Contract.

Time is of the essence with regard to any of the provisions of this Addendum. Except as expressly set forth herein all of the terms of said Contract are incorporated herein by reference. The express terms of this Addendum shall govern and control in the event of any conflicts with the terms of said Contract. The Buyer and Seller agree that the language of this Addendum and the Contract shall be construed according to their fair meaning and not strictly for or against either party. This Addendum constitutes the entire agreement of the parties hereto with respect to the matters addressed herein, and supersedes all prior or contemporaneous contracts, promises, representations, warranties, and statements, whether written or oral with respect to such matters; and this Agreement may not be changed except by a written agreement signed by all the parties hereto.

And, another one:

The Seller shall close any open/expired building permits associated with the Property and shall pay all costs/fines/liens associated therewith. The Seller shall close any open municipal code enforcement cases associated with the Property and shall pay all costs/fines/liens accrued as a result of any code enforcement actions at the Property.

The previous one does not address work which should have been permitted.

What is the Limit of Moderate Wave Action line shown on FEMA Flood Maps and what does this mean?

The Limit of Moderate Wave Action (LiMWA), or projected hazard line for wave action is shown on FEMA’s preliminary, and newer adopted, flood maps and it’s not only for units right on the beach but also shown in places like Jupiter and adjacent to Lake Worth (the water, not the town) where the intracoastal waters pose a “danger of 1.5-foot or higher breaking waves during a 1%-annual-chance flood event.” If homes seaward of this line are damaged or “substantially” re-built they MAY have to conform to higher specifications as if they were on the coast. The line itself is shown as a dark black line with triangles on it. “The LiMWA area alerts property owners on the seaward side of the line that although their property is in say Zone AE, their property may be affected by 1.5-foot or higher breaking waves and may therefore be at significant risk during a 1-percent-annual chance flood event. While not formally defined in the NFIP regulations or mapped as a flood zone, the area between Zone VE and the LiMWA is called the Coastal A Zone (see Figure 2)”

FEMAs proposed flood maps depict two coastal flood hazard zones: Zone VE, where the flood elevation includes wave heights equal to or greater than 3 feet; and Zone AE, where the flood elevation includes wave heights less than 3 feet.

TO LOOK UP YOUR NEW MAP READY THIS POST

At this time the local ordinance (which are implemented in compliance with the NFIP) do NOT differentiate construction in relation to the LiMWA. For instance Article 18 of the Unified Land Development Code adopted by Palm Beach County does not reference this line or construction seaward of it.

HOWEVER, the Florida Building Code Chapter 16 incorporates by reference ACSE 24 for the design of homes in the flood zone. The classification system is based upon locally defined zones and since there is currently no LiMWA line then there is no Coastal A Zone. If however this line IS shown on the adopted FIRM locally then there would be a Coastal A Zone and that IS defined in ASCE 24 and treated, for design purposes, as a Zone V, for places like being right on the beach in Juno or a BIG area of West Palm Beach along the ICW. FEMA has this synopsis of ASCE 24.

Why would it be shown, or perhaps not, on the adopted FIRM? Because the community gets points toward something called the Community Rating System (CRS) for having a Zone A defined.

LiMWA QUICK FACTS

Waves of 1.5 feet or higher have been shown to cause significant damage to structures

A LiMWA line is shown on some FIRMs for areas along coastlines

Structural fill should not be used in the Coastal A Zone

International Codes® require Zone VE construction standards in identified Coastal A Zone areas

Structures in the Coastal A Zone should be built with piling or column foundations Enclosure under elevated structures should be limited to 299 square feet or less within the Coastal A Zone Elevation of the lowest horizontal structural member of the lowest floor should be at or above the base flood elevation (BFE)

(see http://www.fema.gov/medialibrary/assets/documents/3490?id=1718 for more information) in the Coastal A Zone Communities that adopt Zone VE standards in the Coastal A Zone and reference the LiMWA area receive Community Rating System (CRS) credits, which could lower flood insurance premiums for residents and business owners For additional background information on LiMWA, please refer to FEMA Procedure Memorandum 50, available at: http://www.fema.gov/media-librarydata/1388777384290.pdf